Los Angeles-Based Financial Advisor Allegedly Targeted Customers of Iranian Heritage
In an earlier GWG L Bond blog post, our securities attorneys reported we were looking into whether customers of Emerson Equity broker Tony Barouti had suffered losses in these high-yield bonds. In March 2022, investors filed two investor claims seeking $1.37M in damages.
Brokerage firm Emerson Equity is the managing broker-dealer for the GWG issuer of $1.6B of L bonds, backed by life settlements. On April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy protection. The move came just two months after the Texas-based alternative asset firm defaulted on $13.6M in bond payments and interest it owed L Bond investors.
Our L Bond attorneys represent investors in pursuing damages from the 145 brokerage firms that unsuitably sold these junk bonds to customers. These alternative investments were always speculative, risky, and illiquid. They should never have been sold to retail investors, inexperienced investors, conservative investors, and most retirees.
Broker Tony Barouti Marketed L Bonds on Persian Language Radio in Southern California
Based on Tony Barouti’s BrokerCheck Record, each customer dispute filed in March 2022 appears to have been brought on behalf of multiple customers. Both claims allege misrepresentations and omissions of the facts and risks. These Financial Industry Regulatory Authority (FINRA) arbitration claims request $100K and $1.27M in damages, respectively.
According to InvestmentNews, many of Barouti’s clients were of Iranian descent, and he promoted GWG L Bonds through infomercials that aired on Persian language radio in Southern California. At least one of the customer disputes contends that Barouti made false and misleading statements about investing in L Bond through the ads. These misleading statements included that bondholders were guaranteed monthly interest payments.
The Emerson Equity broker is accused of making these junk bonds appear insured, risk-free, and simple rather than complex investments. Among those who suffered investment losses was someone who invested a significant amount of their savings and an older investor in their seventies who lost their entire net worth.
Emerson Equity Partnered With Regional Brokerage Firms To Sell GWG L Bonds
While Emerson Equity was the managing broker-dealer and underwriter for the GWG issuer, it wasn’t the only brokerage firm that sold GWG L Bonds to customers. Some 145 firms were involved, and they partnered with Emerson Equity for a cut of the commissions. Many clients who were sold these products were retail customers who were told they could expect to make money through guaranteed monthly payments.
GWG L Bond investors reportedly paid these firms 8% in commissions. Now, these same bondholders are grappling with losses as they are left holding junk bonds that could be worthless at this point. At least 27,000 L Bondholders may have lost money. Visit GWG Holdings L Bonds for more information about these unrated products.
Seasoned Investment Law Firm
Tony Barouti and many other brokers sold L Bonds to customers without fully appraising them, ensuring they understood the risks, or conducting the proper due diligence to ensure that these investments were suitable for each client. SSEK Law Firm has already filed FINRA arbitration claims against some of these broker-dealers, including NI Advisors and Center Street Securities.