Broker Peter Po Unsuitably Recommended High-Risk Product
A California investor has sustained losses in GWG Holdings’ (NASDAQ: GWGH) L Bonds. NI Advisors and broker Peter T. Po unsuitably recommended this precarious high-yield bond. This retail customer has filed a Financial Industry Regulatory Authority (FINRA) arbitration claim requesting damages for his losses.
Our GWG L Bond investment attorneys represent this claimant in his FINRA arbitration case. We are also investigating other claims of losses by investors whose brokerage firms sold them this illiquid, risky product.
California Investor Alleges Unsuitability, Misrepresentations, and Failure to Supervise
The claimant entrusted his modest savings to NI Advisors, one of the financial firms that had a deal with managing broker-dealer Emerson Equity to sell the GWG L Bonds for a cut of the commission. NI Advisors stockbroker Peter Po then persuaded this customer to invest all of his liquid assets into an L Bond.
Based out of Cupertino, CA, Po assured him that this investment was safe and would offer a return on principal. Instead, this investor, who had difficulty understanding the written disclosures provided by the respondents because English is not his first language, suffered significant losses.
Like other NI Advisors brokers, Po operates out of a one-broker office and has no onsite supervision. He recommended an untraded investment of dubious structure from a questionable company to this customer. He also failed to apprise them of the incredible risks involved, including the Ponzi-like nature of bond repayments. There is no way a reasonable supervisor would have signed off on these trades.
For more information about NI Advisors registered representative Peter Po, visit BrokerCheck.
What Are GWG L Bonds?
Issued by GWG Holdings at a fixed coupon with a specific maturity date, L Bonds are incredibly high risk and speculative. Also, GWG L Bonds are:
- They are issued for a 6-month to 7-year duration.
- Have a higher interest rate the longer the term offered
- Callable: GWG can repurchase them at any time without penalty and at a loss to the investor.
- Unlisted: This doesn’t give a public investor any real way to monitor the bond’s value or sell the bond early if they need more liquidity.
- Supposedly secured by collateral when, in fact, the only real assets that GWG owns are interests in subsidiary companies.
GWG Holdings Owes Investors Millions
In February 2022, GWG Holdings defaulted on $3.25M in principal payments and $10.35M in interest that it owes investors. However, signs of trouble were brewing long before April 2021, when the company discontinued issuing new L Bonds.
At the end of 2020, GWG Holdings failed to file its yearly report with the US Securities and Exchange Commission (SEC). This was just a couple of months after the regulator subpoenaed the company over concerns regarding accounting problems and other issues. GWG delayed disclosing this news to investors and sold another $200M in GWG L Bonds to investors.
Also, by December 31, 2020, the firm had over $200M in outstanding senior debt and more than $1.6B in outstanding L Bonds and other debt. This was a 560% rise in outstanding debt owed to GWG Bondholders over four years. During this same period, the yearly cash flow required to pay ongoing policy premiums was claimed to be over $500M annually. Yet the company had just a fraction of that in cash.
On April 1, 2022, the alternative asset firm notified the SEC that it still has not been able to file its 2021 annual report and additional financial statements.
Skilled GWG L Bond Attorneys
For over 30 years, SSEK Law Firm has helped investors recover many millions of dollars from broker-dealers and their financial advisors. We also represent other L Bond investors, including a retired Missouri couple who recently filed their own FINRA arbitration claim against Center Street Securities.