• On July 31, 2024, the SEC announced that it had reached an agreement with Western International Securities and five of its registered representatives to settle an ongoing lawsuit arising out of the sale of high-risk and speculative L Bonds issued by the now-bankrupt GWG Holdings, Inc.
• On July 28, 2024, the SEC fined broker-dealer LifeMark Securities Corp. for failing to comply with Regulation Best Interest connected with recommending GWG L Bonds to retail customers between July 2020 and January 2022 without exercising reasonable diligence, care, and skill to understand the potential risks, rewards, and costs associated with the recommendations.
• On July 29, 2024, the SEC filed a lawsuit against Garrett Moretz, a LifeMark Securities Corp. broker, alleging that he fraudulently sold high-risk and speculative GWG L Bonds to customers by misrepresenting them as “guaranteed.”
• Retail Investors who purchased GWG L Bonds are encouraged to contact the GWG L Bond lawyers at Iorio Altamirano LLP to review their legal rights to recover their investment losses.

Western International Securities Agrees to Settle Lawsuit with the SEC

On July 31, 2024, the SEC announced that it had reached an agreement with Western International Securities and five of its registered representatives to settle an ongoing lawsuit arising out of the sale of high-risk and speculative L Bonds issued by the now-bankrupt GWG Holdings, Inc.

The SEC filed its complaint on June 15, 2022, that the brokerage firm and several of its representatives violated Regulation Best Interest by failing to perform due diligence regarding the inherent risks associated with L Bonds issued by GWG Holdings, Inc. and recommending the L Bonds to its customers. The alleged violations were made in connection with the sale of approximately $13.3 million in L Bonds sold to retail customers.

To read more about the allegations, please see our previous blog post: Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

As part of the settlement, which requires court approval, Western International agreed to disgorge $34,468 in commissions it received in connection with the transactions at issue. The brokerage firm also agreed to pay a civil fine of $160,000. The financial penalties represent a small portion of commissions that the firm and its brokers received in selling GWG L Bonds to retail investors. According to court records, Western International received at least $3 million in commissions from GWG Holdings for selling L Bonds to retail investors between April 2018 and April 2022.

Investors who purchased GWG L Bonds should know that they will not be receiving monetary compensation from the SEC’s settlement. Instead, they will need to file their own independent securities arbitration claim to seek recovery.

GWG L bond investors should contact our law firm to review their legal options. Customers may be entitled to compensation without paying any out-of-pocket fees or costs through a contingency fee arrangement with securities arbitration law firm Iorio Altamirano LLP.

SEC and LifeMark Securities Corp Settle GWG L Bond-Related Charges

Western International Securities is not the only broker-dealer to settle GWG L Bond-related charges with the SEC this week. On July 28, 2024, the SEC announced that it had reached a settlement with broker-dealer LifeMark Securities Corp. The settlement was reached in anticipation of the SEC initiating administrative and cease-and-desist proceedings connected with Regulation Best Interest violations arising out of the sale of GWG L Bonds.

According to the SEC, between July 2020 and January 2022, LifeMark Securities and one of its registered representatives failed to comply with Regulation Best Interest’s Care Obligation, Exchange Act Rule 15l-1(a)(2)(ii), when the registered representative recommended GWG L Bonds to retail customers without exercising reasonable diligence, care, and skill to understand the potential risks, rewards and costs associated with their recommendations.

Specifically, the SEC alleged that LifeMark Securities, through its broker, unreasonably disregarded, dismissed, misunderstood, or failed to take reasonable steps to understand significant disclosures and information regarding GWG and L Bonds contained in prospectuses and SEC filings. Instead, the broker allegedly relied on LifeMark Securities’ approval of L Bonds without question or inquiry. For example, according to the SEC, the broker did not know what was meant by GWG’s statement in the June 2020 Prospectus that L Bonds were only suitable for people with substantial financial resources and did nothing to find out prior to recommending L Bonds to retail customers.

The SEC also alleged that the broker failed to comply with the customer-specific prong of Regulation’s Best Interests Care Obligation by recommending investing $50,000 into an illiquid 5-year GWG L Bond to a 63-year-old semi-retiree with a moderate risk tolerance and a documented investment objective of preservation of capital. The broker supposedly did not know and could not explain how it was in the customer’s best interest to buy an illiquid 5-year L Bond when at the time he made the recommendation, there was “substantial doubt” about GWG’s ability to continue as a going concern for the next 12 months following the filing of its 2020 Form 10-K.

LifeMark Securities consented to a civil monetary penalty of $85,000 and a disgorgement of $4,410 in commissions.

Unfortunately, sanctions such as these do not put money back into the pockets of retail investors who lost money due to failures by firms and brokers in selling GWG L Bonds.

However, retail investors who purchased GWG L Bonds based on the recommendation of their brokers are not without recourse and should contact our GWG L Bond lawyers for a free and confidential consultation to review their legal rights.

SEC Charges LifeMark Securities Corp. Broker with Fraud Related to the Sale of GWG L Bonds

On July 29, 2021, the Securities and Exchange Commission filed a lawsuit against another LifeMark Securities Corp. broker related to the sale of GWG L Bonds. The complaint, filed in Federal Court in Charlotte, NC, alleged that broker Garrett Moretz fraudulently sold high-risk and speculative GWG L Bonds to customers by misrepresenting them as “guaranteed” from at least September 2019 until about August 2020.

For example, the SEC’s complaint alleges that the broker sent emails to customers that contained material misrepresentations, such as:

• “Are you looking for a great guaranteed rate of return and payout on your money?”
• “We have fully guaranteed investment/income options available in 2-, 3-, 5-, and 7-year terms.”
• “These are guaranteed to pay the specified rate of return MONTHLY for the predetermined period after which you get your full investment returned.”
• “These are all great opportunities for folks that want a steady rate of return and guaranteed payout.”

The complaint also alleges that Mr. Moretz represented to another customer that the bonds were “safe” and “guaranteed.’ GWG L Bonds were neither. Instead, they were speculative, high-risk, illiquid, high-commission, and unrated bonds.

Mr. Moretz is facing charges of violating Section 17(a) of the Exchange Act of 1933, Section 10(b) of the Securities Exchange Act of 1934, and Rule 10b-5 thereunder.

About the L Bonds

GWG L Bonds were speculative, high-risk, illiquid, and unrated alternative investments suitable only for customers with substantial resources.

Brokerage firms are required to make investment recommendations that are in the best interest of their customers. Financial advisors also have an obligation to be truthful and disclose all material facts and risks to customers when making investment recommendations. Firms and brokers must also conduct reasonable due diligence on the securities they offer before recommending them to customers. Iorio Law PLLC is investigating whether brokerage firms and their brokerages met these obligations connected with their sale of L Bonds to retail investors.

About Iorio Law PLLC

Iorio Law PLLC is a securities arbitration law firm in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

August M. Iorio, managing attorney of Iorio Law PLLC, was at the forefront of the investigation into the GWG L Bonds starting in late 2021 and has already helped investors recover over $3.5 million in losses.

GWG L Bond investors should contact securities arbitration law firm Iorio Altamirano LLP to review their legal options. The firm will review the terms of investors’ GWG L Bond investments at no cost and provide a free consultation. Customers may be entitled to compensation without paying any out-of-pocket fees or costs through a contingency fee arrangement with securities arbitration law firm Iorio Altamirano LLP. To set up an evaluation, email securities arbitration attorneys August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

The law firm’s investigation is ongoing after two separate FINRA arbitration panels awarded investors damages in connection with the sale of L Bonds by their brokers and brokerage firms. In the first case, an arbitration panel in Los Angeles, California, held two brokers liable for their negligence in selling GWG L Bonds to an investor and awarded over $1 million in damages. In the second case, a FINRA arbitration panel in Boston, Massachusetts, awarded an investor $280,000 in damages, finding that brokerage firm Ages Financial Services, LTD was liable for not properly informing the investor about the risks of GWG L Bonds.

Iorio Altamirano LLP represents dozens of GWG L Bond investors across the country and encourages investors who are taking a “wait and see approach” to act now. As the GWG Wind Trustee begins to liquidate GWG’s assets, it is becoming more evident that the GWG L Bonds, now the New Series A1 WDT Interests, are nearly worthless.

In 2020, notwithstanding GWG’s financial challenges and change in business strategy, Centaurus Financial actually increased the amount of GWG L Bonds that it would allow retail investors to purchase. After the cap was raised, many brokers aggressively sold more L Bonds to their clients and encouraged them to invest up to the new maximum limits.

Iorio Altamirano LLP continues to believe that GWG L Bonds investors’ best avenue for potential recovery of losses is to file a separate FINRA arbitration claim against their brokerage firms. Iorio Altamirano LLP has already helped GWG L Bond investors recover over $1.4 million in losses.

Investors who purchased GWG L Bonds through Centaurus Financial or any other broker-dealer are encouraged to contact Iorio Altamirano LLP (www.gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

To read more about GWG L Bonds and the alleged misconduct, please visit our investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

Centaurus Financial (CRD No. 30833)

Centaurus Financial is a dually registered investment adviser and broker-dealer headquartered in Anaheim, California. The firm is registered in 53 U.S. states and territories and has nearly 600 registered representatives nationwide.

GWG Holdings, Inc. sold the GWG L Bonds through a dealer-manager and a network of regional broker-dealers, including Centaurus Financial, who pitched the products to individual retail investors. GWG’s dealer-manager and selling agents, such as Centaurus Financial, received up to 5% of the principal amount of the GWG L Bonds sold. The selling brokerage firms also received additional compensation and commissions, up to 8% of the aggregate gross proceeds from the sale of GWG L Bonds.

Centaurus Financial was one of the largest sellers of the GWG L Bonds to retail customers between 2018 and 2022, receiving at least $3.6 million in commissions from GWG Holdings for brokerage services. Only Emerson Equity LLC, the dealer-manager, sold more L Bonds to retail investors than Centaurus Financial during this period. Accordingly, we believe that Centaurus Financial sold approximately $70 million in GWG L Bonds during this time period.

Upon information and belief, GWG L Bonds were sold by the following brokers who were associated with Centaurus Financial:

• Marc Korsch, Sarasota, FL (CRD No. 5525226) – Barred from the securities industry.
• Tony Kassaei, Irvine, CA (CRD No. 4375259) – Barred from the securities industry.
• Cindy Lucille Porto Chiellini, Lexington, SC (CRD No. 1015592)
• Katherine Nishnic, Lexington, SC (CRD No. 2499553)
• Atul Makharia, Lexington, SC (CRD No. 5070762)
• Otoo Ramon Bohon, Jr., Tucson, AZ (CRD No. 5677597)
• Gregory Richards, Scottsdale, AZ (CRD No. 288898)
• Steven Nielsen, Gilbert, AZ (CRD No. 4184826)
• George Howard, Germantown, TN (CRD No. 2958866)
• Eric Kuchherzki, Burlingame, CA (CRD No. 2529623)
• Valentino Scott, West Hills, CA (CRD No. 1497615)
• Mark Williams, Carmel, CA (CRD No. 4061842)
• Nicholas Ellis, Tustin, CA (CRD No. 1082891)
• David J. Segarra, Las Vegas, NV (CRD No. 4482059)
• Atul Makharia, Lexington, SC (CRD No. 5070762)
• Donna Payne (Donna Klink), Summerland, CA (CRD No. 1007323)
• William Fuentes, Simi Valley, CA (CRD No. 1330327)
• Dick Coppin, Twain Harte, CA (CRD No. 865875)

Brokers and brokerage firms like Centaurus Financial are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also be truthful and disclose all material information and risks of a security when making a recommendation. Retail investors have the right to make an informed decision about whether they are willing to accept the risk of a security. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Trouble with Regulators

Centaurus Financial has repeatedly been sanctioned for running afoul of securities and FINRA rules.

In February 2023, Centaurus Financial agreed to pay a $750,000 civil penalty after the SEC charged the firm in connection with the unsuitable recommendation of variable interest rate structured products to retail customers. The SEC’s order found that Centaurus failed to implement, and its branch manager failed to follow, Centaurus’ customer-specific suitability procedures and that Centaurus violated the broker-dealer books and records provisions of the federal securities laws. The SEC’s order found that Centaurus violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) and Section 17(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 17a-4(e)(5), 17a-4(f)(2), and 17a-3(a)(17)(i)(B)(3) thereunder. The SEC concluded that Centaurus failed reasonably to supervise the firm’s brokers.

See: Centaurus Financial Sanctioned and Fined by Regulators for Supervisory Failures for the Second Time in Three Months.

In September 2022, FINRA’s Department of Enforcement filed a civil complaint against Centaurus Financial and one of its brokers. The complaint alleges that the broker sold Unit Investment Trusts (UITs), non-traded real estate investment trusts (REITs), and non-traded business development companies (BDCs) to customers, causing fees and commissions that could have been avoided if the broker, who was also a registered investment advisor, had taken advantage of his investment advisory relationship with the customers. The broker’s conduct allowed him and Centaurus to share in the selling commissions that his customers incurred while providing his customers with no additional benefits. The complaint alleges that the recommendations were unsuitable because there were lower-cost UITS, REITs, and BDCs available. The broker and Centaurus allegedly put their own financial interests ahead of their customers.

In June 2021, the SEC ordered Centaurus Financial to pay $1.2 million over disclosure failures and misleading statements to clients regarding investment advice it gave about mutual funds and cash sweep money market funds. The SEC’s order found that Centaurus Financial engaged in practices that violated its fiduciary duty to its advisory clients, including making misleading statements and providing inadequate disclosures regarding its receipt of 12b-1 fees from client investments, and although Centaurus was eligible to self-report to the SEC, it did not do so. Centaurus Financial consented to a cease-and-desist order and a censure, and agreed to pay disgorgement of $907,377, prejudgment interest of $124,019, and a civil penalty of $250,000. The firm also agreed to distribute funds to harmed clients and comply with certain undertakings.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in L Bonds offered by GWG Holdings, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

Further, over the past month, the share price of Beneficent has continued to fall and is currently trading at approximately $0.60 per share.

We continue to believe that GWG L Bonds investors’ best avenue for potential recovery of losses is to file a separate FINRA arbitration claim against their brokerage firms. Iorio Altamirano LLP has already helped GWG L Bond investors recover over $1.4 million in losses.

If you would like more information about how to file a claim, please contact our firm to schedule a free and confidential consultation.

Original Post:

On October 3, 2023, Liz Freeman, the Trustee of the GWG Wind Down Trust, received approval from the United States Bankruptcy Court for the Southern District of Texas to sell the portfolio of life insurance policies for only $10 million in cash.

The purchaser will also assume the Vida Exit Facility, which has a balance of approximately $605 million. Of the $10 million, $2.9 million will likely be held in Trust for up to three years. There is also ongoing litigation about whether GWG and the Wind Down Trust owe $18 million to a previous debtor-in-possession lender. If the Bankruptcy Court determines that it does, then L bondholders will get nothing from the sale of the portfolio of life insurance policies. At best, though, L Bondholders will collectively receive at most $7 million. That’s only 0.5% of the $1.3 billion in outstanding L bond obligations.

These realities likely led United States Bankruptcy Judge Marin Isgur to conclude that “there is no material recovery that will go out on percentage basis out of the liquidation of this portfolio [of life insurance policies].”

He also stated that he continues “to believe that the [GWG] L Bondholders will lose a very large percentage of their investments.”

That’s likely because the only other two assets held by the GWG Wind Down Trust to be liquidated are (1) 4.6 million shares of common stock in FOXO and (2) 169.7 million shares of common stock in Beneficent, which are close to worthless.

FOXO currently trades around $0.12 per share (giving the shares a book value of $552,000). However, Ms. Freeman testified at the hearing that the “securities are not marketable” and that the company “is evaluating its options, not doing well, and may file for bankruptcy itself.” Stated another way, the asset is nearly worthless at this time.

Beneficent is currently trading at around $1.29 per share. However, the shares have not been marketable. Beneficent’s S1 was approved last week by the SEC, so some restrictions are being lifted. Still, there is no reason to believe that the GWG Wind Down Trust will be able to liquidate its shares for any substantial value. Mr. Freeman testified that there are problems associated with liquidating the shares, including the fact that trading volume has been very low. There does not appear to be a market for 169.7 million shares. Further, many believe that dumping that kind of position onto the market would likely drive Beneficent’s share price to $0.

The only other asset that the GWG Wind Down Trust owns is a beneficiary interest in the GWG Litigation Trust. The GWG Litigation Trust is pursuing legal causes of action against companies and individuals that may have violated laws prior to GWG’s bankruptcy filing. However, any recovery from these legal causes of actions remains unknown and speculative.

The following is a summary of the GWG Wind Down Trust’s Assets:

We continue to believe that GWG L Bonds investors’ best avenue for potential recovery of losses is to file a separate FINRA arbitration claim against their brokerage firms. Iorio Altamirano LLP has already helped GWG L Bond investors recover over $1.4 million in losses.

If you would like more information about how to file a claim, please contact our firm to schedule a free and confidential consultation.

To read more about GWG L Bonds and the alleged misconduct, please visit our other blog posts:

GWG’s Bankruptcy Plan Goes into Effect; GWG L Bonds Canceled

What L Bondholders Need to Know About GWG Holdings, Inc.’s Chapter 11 Plan

Broker-Dealers Sold GWG L Bonds Using Aggressive and Misleading Marketing

“GWG Was a Classic Ponzi Scheme” – Official Committee of Bondholders of GWG Holdings, Inc.

Iorio Altamirano LLP (gwglawyer.com), a law firm that represents retail investors, is representing many GWG L Bond investors against brokerage firms across the country to recover investment losses and damages sustained by those firms’ recommendations to invest in GWG L Bonds. Based on the law firm’s investigation, there appears to have been widespread negligence and misconduct by many brokers and broker-dealers across the country.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in L Bonds offered by GWG Holdings, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

The arbitration claim also alleges that David Lerner Associates and its broker, Robert Rasbach, misrepresented and omitted material information about the investment strategy and the energy investments, including:

• That investing in Energy 11 and Energy 12 involved a “high degree of risk” and was only appropriate for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment.”
• Energy 11 and Energy 12 were risky energy start-ups that were run by individuals with no experience in the oil and gas industry who were “wildcatting,” or drilling for oil and natural gas in unproven areas that have no concrete historical production, with its success tied to the energy industry and the ability of the partnerships to engage in a “liquidity event.”
• Energy 11 and Energy 12 were “blind pool” investment vehicles that put very few restrictions on what and how they could invest.
• The risks related to concentrating a significant portion of their portfolios into the volatile and risky energy sector.

Customers of David Lerner Associates, Inc. that have purchased proprietary energy-related securities from David Lerner, including Energy 11 and SOAEX, should contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as David Lerner Associates, Inc.

Energy 11, Energy 12, and SOAEX

Energy 11 and Energy 12 are illiquid and high-risk limited partnerships that were sold exclusively by David Lerner Associates. Each limited partnership was formed to acquire and develop oil and gas properties. The partnerships were “blind pools,” meaning at the time of the initial offering, the partnership had not identified any properties for acquisition.

Additionally, the partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, engaging in a liquidity event. Each limited partnership’s ability to make a return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the oil and gas properties in which the partnerships invested.

According to the Energy 11 and Energy 12 prospectuses, investments in the partnerships involve a “high degree of risk,” and these limited partnership interests were appropriate only for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment.”

Energy 11 suspended distributions to its limited partners in March 2020 before resuming them at a reduced rate in late 2021. Energy 11 accumulates unpaid distributions based on an annualized return of seven percent (7%), and all accumulated unpaid distributions are required to be paid before a final payout can occur. As of December 31, 2022, the unpaid payout accrual for the period from March 2020 through November 2021 totaled $2.387671 per common unit, or approximately $45 million.

In addition, as of Energy 11’s most recent 10-Q filing with the SEC, the limited partnership had $20.38 million in total liabilities for the quarter ended June 30, 2023.

The following is a summary of Energy 11’s current liabilities, including accrued unpaid distributions:

• Total Liabilities: $20.38 million
• Unpaid Accrued Distributions: $45 million
• Total Liabilities 45+ Unpaid Accrued Distributions: $65.38 million.

The Spirit of America Energy Fund (SOAEX) is a mutual fund created for customers of David Lerner Associates that invests 80% of its net assets in energy and energy-related companies. The Spirit of America Energy Fund primarily invests in energy-related entities such as exploration, production, and transmission companies, as well as Master Limited Partnerships (“MLPs”). The fund’s investment objective is to provide investors with long-term capital appreciation and current income. SOAEX’s stock price has plummeted since 2015.

David Lerner Associates, Inc.

David Lerner Associates, Inc. is an SEC-registered broker-dealer and FINRA member with six branch offices in New York, Connecticut, New Jersey, and Florida. David Lerner is notorious in the securities industry and has been sanctioned numerous times by securities regulators, including censures, injunctions, monetary fines, and restitution orders.

David Lerner Associates was the exclusive dealer-manager for Energy 11 and received 6% in selling commissions. David Lerner Associates is also entitled to a contingent incentive fee of up to an amount equal to 4% of gross proceeds of units sold. Based on public disclosures, it appears that David Lerner Associates has received over $22 million in seller commissions for selling Energy 11 to its customers and is potentially entitled to an additional $15 million in contingent incentive fees.

FINRA has brought numerous actions against brokers and supervisors who sold or supervised the sale of David Lerner Associates’ proprietary energy-sector securities. Those include:

• FINRA v. Abbe Jan Wollins, AWC No. 2019063686205 (June 20, 2023)
  • “Between August 2015 and April 2018, while associated with [David Lerner Associates], Willins recommended that two customer accounts invest in limited partnerships formed to acquire and develop oil and gas properties without having a reasonable basis to believe those illiquid investments were suitable for the customers. Therefore, Wollins violated FINRA Rules 2111 and 2010.”
  • “Customers A and B were a retired married couple who held an investment account with DLA. In August 2015, when Wollins recommended that they invest in an illiquid limited partnership, Customers A and B were approximately 82, retired, and receiving pension and social security benefits and savings. Between August 2015 and December 2016, at Wollins’ recommendation, Customers A and B invested a total of $128,907 in one of the limited partnerships. Wollins also recommended that senior Customer C invest $25,000 in one of the limited partnerships. At the time of his investment, Customer C was 93 and, received social security benefits, and took required withdrawals from an IRA. Customer C understood that his investment in the limited partnership would supplement his monthly income with these returns. Wollins’ recommendations that Customers A, B, and C invest in the energy partnerships were not suitable given their investment profiles. Wollins received $2,448.30 in commissions from these investments.”
• FINRA v. Rande Aaronson, AWC No. 2019063686204 (May 30, 2023)
  • “From January 2015 through October 2019, branch manager Aaronson failed to reasonably supervise sales of two illiquid oil and gas limited partnerships, Energy 11, L.P. (E11) and Energy Resources 12, L.P. (E12), to ensure that the sales were suitable for customers given their investment profiles, as required by FINRA Rule 2111 and the firm’s policies and written supervisory procedures (WSPs). Therefore, Aaronson violated FINRA Rules 3110 and 2010.”
  • “E11 and E12 are illiquid limited partnerships that registered representatives at DLA sold to their customers. Each limited partnership was formed to acquire and develop oil and gas properties. Additionally, the partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, engaging in a liquidity event. Each limited partnership’s ability to make a return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the oil and gas properties in which the partnerships invested. According to the E11 and E12 prospectuses, investments in the partnerships involve a “high degree of risk,” and these limited partnership interests were appropriate only for investors willing and able to assume the risk of a “speculative, illiquid, and long-term investment” (emphasis added).
  • “The firm’s WSPs also included a policy specific to a customer’s change of their risk tolerance, as reflected on each customer’s Suitability Profile. The policy prohibited changes to a customer’s risk tolerance solely for the purpose of qualifying the account to engage in a certain transaction. Branch managers had the supervisory responsibility to review Suitability Profiles, to assess the appropriateness of any risk tolerance changes on Suitability Profiles, and to accept and sign Suitability Profiles.”
• FINRA v. Russ Kory, AWC No. 2019063686203 (September 2, 2022)
  • “Between August 2015 and September 20 19, while associated with David Lerner Associates, Kory recommended that three firm customers invest in the firm’s proprietary limited partnerships formed to acquire and develop oil and gas properties without having a reasonable basis to believe those illiquid investments were suitable for the customers. Therefore, Kory violated FINRA Rules 2111 and 2010.”
  • “Each limited partnership was formed to acquire and develop oil and gas properties located onshore in the United States. The partnerships were “blind pools,” meaning at the time of the initial offering, the partnership had not identified any properties for acquisition. The partnerships’ objectives included making distributions to investors and, five to seven years after the termination of the offering, to engage in a liquidity event. Each limited partnership’s ability to make return of capital distributions to its partners and to engage in a liquidity event was substantially dependent on the performance of the properties in which the partnerships invested. Additionally, according to the prospectuses, investments in the partnerships involve a “high degree of risk” (emphasis added).
• FINRA v. Jeffrey D. Basford, AWC No. 2019063686202 (August 15, 2022)
  • “During the course of a FINRA investigation into potential unsuitable sales of proprietary energy products at the firm, Basford declined to appear for on-the-record testimony requested pursuant to FINRA Rule 8210.”
• FINRA v. Charles Bonilla, AWC No. 2020067626001 (February 8, 2021)
  • “Between December 2015 and December 2017, while associated with David Lerner Associates, Bonilla recommended that his customers invest in energy sector securities without having a reasonable basis to believe those investments were suitable. Due to Bonilla’s failure to conduct reasonable diligence, there were potential risks and costs of the investments, among other things, that Bonilla did not adequately understand. Accordingly, Bonilla violated FINRA Rules 2111 and 2010.”
  • “The fund’s holdings are concentrated in energy-related securities, and the fund’s performance is largely dependent on the condition of the energy industry.”

About Iorio Altamirano LLP

Iorio Altamirano LLP is investigating claims on behalf of David Lerner Associates’ customers who purchased Energy 11 and SOAEX.

To read more about the investigation, please click on the following links:

Energy 11, L.P. and Energy Resources 12 L.P.: How to Recover Investment Losses from David Lerner Associates, Inc.

Investor Update: Energy 11, L.P.’s Substantial Debt and Missed Accrued Distributions Could Take Years to Pay Off

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have suffered investment losses, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

When disputes arise between investors and brokerage firms, they are usually resolved through arbitration. The Financial Industry Regulatory Authority (FINRA) offers a streamlined and cost-effective dispute resolution forum for resolving disputes in the securities industry. In this blog post, we’ll take a deep dive into FINRA arbitration, its key features, benefits, and what you should know if you find yourself involved in a securities-related dispute.

Understanding FINRA Arbitration

What is FINRA?

The Financial Industry Regulatory Authority (FINRA) is a self-regulatory organization authorized by the United States Congress to oversee and regulate the securities industry. One of FINRA’s essential functions is to provide a forum for resolving disputes between investors, brokerage firms, and individual brokers.

Arbitration vs. Lawsuits: The Key Differences

Unlike traditional litigation, where disputes are resolved through the court system, FINRA arbitration is a private, alternative dispute resolution process. There are several key differences:

1. • Speed and Efficiency: FINRA arbitration typically resolves disputes more quickly than litigation, which can drag on for years. Arbitration cases often conclude within 12-18 months, allowing parties to move on with their lives and investments more quickly.
   • Cost-Effective: Litigation can be expensive due to legal fees, court costs, and other expenses. In contrast, FINRA arbitration tends to be more cost-effective, as it has lower filing fees and streamlined procedures.
   • Less Burdensome Discovery: Discovery is the exchange of relevant documents and information. In a lawsuit, discovery consists of depositions, interrogatories, and the exchange of documents. In FINRA arbitrations, depositions and interrogatories are generally not allowed. As a result, the discovery process is more streamlined, less burdensome, and less costly.
   • Confidentiality: FINRA arbitration proceedings are generally confidential, whereas court proceedings are a matter of public record.

Who Can Initiate FINRA Arbitration?

Parties who can initiate FINRA arbitration include investors, brokerage firms, and individual brokers. Many arbitrations arise over investment losses. Investors often file arbitration claims against their brokerage firms when the firm or its agent broker recommends investments that are not suitable and in the best interest of the investor. Investors also file arbitration claims when their brokers misrepresent or omit material information at the time of the recommendation. Common claims brought by investors include unsuitability, violation of Regulation Best Interest (RegBI), misrepresentation or omission of material information, unauthorized trading, churning, breach of fiduciary duty, and financial elder abuse.

The FINRA Arbitration Process

1. Filing a Claim – The process begins with the filing of a Statement of Claim by the aggrieved party. The respondent (the party against whom the claim is filed) is then given the opportunity to respond
2. Arbitrator Selection – The parties select arbitrators from FINRA’s roster of arbitrators using a strike and rank system. The number of arbitrators that serve on an arbitration panel varies depending on the size of the complaint.
3. Discovery – The exchange of relevant documents and information.
4. Hearing – A hearing is held where both parties present their cases, including evidence and witnesses. The arbitrators evaluate the evidence and arguments presented.
5. Award – The arbitrators deliberate and issue a written decision. This decision is final and binding. Parties are generally required to abide by the decision, and there is limited scope for appeal.

Settlement

At any time during the arbitration process, the parties can resolve their dispute by entering into a settlement. Approximately 69 – 70% of all FINRA arbitrations are resolved through settlement instead of a hearing.

Conclusion

Investors who have suffered investment losses should be aware of their rights to pursue arbitration when disputes arise. Legal representation is often advisable to navigate the complexities of the process effectively.

Investors involved in a securities-related dispute are encouraged to consult with attorneys who have vast experience in FINRA arbitration to help them navigate the process and ensure that their rights and interests are protected throughout the proceedings.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have suffered investment losses, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

GWG has disclosed that they are targeting July 31, 2023, as the effective date for the Plan.

As part of the Chapter 11 Plan, GWG will no longer operate as an ongoing concern. Instead, the Chapter 11 Plan provides that the GWG will be liquidated, and two liquidating trusts will be created: (i) the Wind Down Trust and (ii) the Litigation Trust.

The Wind Down Trust will take all necessary steps to wind down the business affairs of the Debtors and liquidate the Wind Down Trust Assets. Both the Wind Down Trust and the Litigation Trust have initial three-year terms, which can be extended an additional two years.

While the L Bondholders are going to receive “New Series A1 WDT Interests” in the Wind Down Trusts, the primary issue is that GWG’s current tangible assets are dwarfed by outstanding L Bond obligations, and GWG’s remaining assets are going to take some time to monetize, if ever.

GWG has only four assets: (1) its portfolio of life insurance policies; (2) equity interest in FOXO, (3) equity interest in Beneficient; and (4) potential legal actions against third parties, primarily Beneficent.

According to GWG’s analysis in the bankruptcy proceeding, the projected net residual value from the sale of the life insurance policies is projected to be $0 to $78 million, and the equity interest in FOXO is nominal, $3.3 million.

For L Bonds to have any significant residual value, GWG must monetize its equity interest in Beneficient or its legal claims against third parties. It is very likely and possible that L bondholders receive nothing from GWG’s interests in Beneficent or its retained causes of action, and if they do, it will likely take several years to result in cash distributions.

How and when GWG will be able to monetize its equity interest in Beneficient remains uncertain and speculative.

Since going public on June 8, 2023, and opening at $15 on the first day the new BENF traded, the stock price has plummeted.

BENF ended the trading day with a closing price of $2.87 on July 13, 2023.

Based on historical trading volume data, it would take 3.5 years to sell the bondholders’ approximately 155 million to 165 million shares.

According to at least one expert, BNEF is likely worth $0 as a result of its poor fundamentals:

• Beneficient values its portfolio of private equity investments at $547.8 million and has $21.8 million in restricted cash as of December 31, 2022. It has $242.6 million in liabilities, so it has tangible net assets of $327 million.
• There are $684 million in non-controlling interests and $251 million in redeemable non-controlling interests on BENF’s balance sheet.
• The tangible net assets available to non-controlling interests and common stockholders is $1.727 per share of common stock, although some or all of the tangible net assets would be payable to the non-controlling interests. If the non-controlling interests are senior to common stockholders, the tangible net assets available to common stockholders is -$3.212 per share.
• BENF reports 80% of its total assets are goodwill. The only way BENF can be worth some positive value after things settle down is if BENF’s $2.37 billion accounting goodwill reflects a substantial market valuation of BENF’s intellectual property.

Since this report, Beneficient has filed its 10-K annual report with the SEC disclosing additional worrisome news:

• For Year-End March 31, 2023, Beneficent had a net operating loss of $253 million.
• A substantial amount of Beneficient’s assets is comprised of goodwill and intangible assets. The sustained decline in the price of BNF since going public on June 8, 2023, is an indicator that impairment is present and may require assessment. In plain English, BENF will likely need to reduce the amount of its goodwill early next year, possibly significantly, thus reducing the amount of assets held by the company.
• On June 29, 2023, Beneficient received a “Wells Notice” from the SEC’s Division of Enforcement, stating that the SEC has made a preliminary determination to recommend that the SEC file a civil enforcement action against the company alleging violations of certain provisions of the Securities Act and the Securities Exchange Act relating to the Company’s association with GWG Holdings. In addition, the company’s Founder, CEO, and Chairman, Brad Heppner, also received Wells Notices related to the investigation of GWG Holdings.

Based on historical trading volume and pricing data and the recent news, BENF stock price could continue to drop o, and any attempt by the L Bondholders’ trust to sell millions of GWG’s shares could drive the price close to $0.

According to the expert, ultimately, bondholders will likely receive negligible amounts – perhaps $1 per share – for their GWG common stock. Even this amount cannot be achieved in open market transactions when the market is not absorbing total sales of 100,000 to 200,000 shares per day. Only through a bulk sale of a large controlling interest can the bondholders’ trust hope to realize even $150 million. Moreover, based on the projections provided in GWG’s Chapter 11 Plan, a recovery of $150 million through block stock sales pays bondholders 9 cents on the dollar.

Based on the information outlined above, we believe it is highly unlikely that they will obtain a quick and full recovery through the bankruptcy process.

We also continue to believe that GWG L Bonds investors’ best avenue for potential recovery of losses is to file a separate FINRA arbitration claim against their brokerage firms. If you would like more information about how to file a claim, please contact our firm to schedule a free and confidential consultation.

To read more about the alleged misconduct, please visit our other blog posts:

What L Bondholders Need to Know About GWG Holdings, Inc.’s Chapter 11 Plan

Broker-Dealers Sold GWG L Bonds Using Aggressive and Misleading Marketing

“GWG Was a Classic Ponzi Scheme” – Official Committee of Bondholders of GWG Holdings, Inc.

Iorio Altamirano LLP (gwglawyer.com), a law firm that represents retail investors, is representing many GWG L Bond investors against brokerage firms across the country to recover investment losses and damages sustained by those firms’ recommendations to invest in GWG L Bonds. Based on the law firm’s investigation, there appears to have been widespread negligence and misconduct by many brokers and broker-dealers across the country.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in L Bonds offered by GWG Holdings, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

In 2021, a federal grand jury brought criminal charges against Lash, David Gentile (founder and owner of GPB Capital), and a third individual, Jeffry Schneider. The charges are related to their management of the company, which has been described as a “Ponzi-like scheme.” In February 2021, the SEC also charged GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies with running a Ponzi-like scheme that raised roughly $1.7 billion from over 17,000 investors, many of whom were retirees.

The criminal complaint alleged that Mr. Gentile, Mr. Lash, and Mr. Schneider used new money invested by retail investors to cover the promised 8% returns to prior investors, yet failed to disclose the source of the distributions to investors.

Mr. Lash could face more than 15 years in prison as a result of the guilty plea for his alleged role in the Ponzi-like scheme. Sentencing is scheduled for October 4, 2023.

A trial for Mr. Gentile and Mr. Schneider is scheduled to begin in June 2024.

Since February 2021, GPB Capital has been operating under the supervision of a court-appointed monitor. Despite liquidating a significant portion of the firm’s assets, the company’s managers have struggled to devise a plan for distributing the cash at their disposal to investors and other claimants.

The court-appointed monitor and the United States Securities and Exchange Commission have recommended putting GPB Capital into receivership, a court-appointed tool that would put the entire company, its assets, and all financial and operating decisions under the control of a single court-appointed receiver. The proposal has been contested by the company’s owner, David Gentile. The Court has yet to act on the receivership proposal.

GPB Capital had stated on its website in April 2023 that it could not come up with a distribution plan or make any distributions to investors until the court rules on a receivership. Limited partners have not received distributions since 2018, while their invested capital remains in limbo.

According to the recent regulatory filings, it appears that GPB Capital is holding back a significant reserve to cover potential liabilities arising out of numerous regulatory, ligation, arbitration, and other proceedings. The company disclosed that any liability originating from such actions could result in an outflow of cash, which would most likely not occur until 2024 at the earliest.

Further, GPB Capital’s partnerships, such as GPB Automotive, GPB Holdings, GPB Holdings II, GPB Waste Management, or GPB Cold Storage, are setting aside a large amount of money to cover the legal expenses of its current and former officers, directors, principals, representatives, and affiliates, for any legal expenses and costs they are incurring connected within the numerous litigations and disputes that are currently pending. GPB Capital has disclosed in regulatory filings that distributions may be delayed or withheld until such reserves are no longer needed or the escrow period expires.

GPB Fraud and Brokerage Firms’ Liability

GPB Capital Holdings LLC, a private-equity firm based in New York, was established in 2013. It acted as the primary partner of several investment funds, including GPB Holdings, LP, GPB Holdings II, LP, GPB Automotive Portfolio, LP, GPB Waste Management, LP, and GPB Cold Storage, LP.

In February 2021, the SEC accused GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies of orchestrating a Ponzi-like scheme, defrauding nearly 17,000 retail investors across the nation and gathering approximately $1.7 billion via securities issued by GPB Capital.

GPB Capital solicited capital from private retail investors via private placement offerings, which were sold by nearly sixty broker-dealers and investment advisory firms across the country. However, significant concerns have been raised regarding the broker-dealers’ failure to conduct proper due diligence regarding GPB Capital and the GPB funds.

The Financial Industry Regulatory Authority (FINRA) mandates that “reasonable diligence” provides the firm or associated person with a clear understanding of the potential risks and rewards of the recommended security or strategy. Brokerage firms may have neglected to conduct sufficient due diligence into GPB Capital and its funds before selling the private placement offerings to their clients, possibly overlooking numerous red flags, including detecting whether distributions were being paid out from operating revenue or from invested capital. In the case of GPB Capital, the operating revenues of its partnerships were not sufficient to cover the company’s promised 8% distributions, yet the payouts continued. Brokerage firms either failed to detect these discrepancies or ignored them.

Investors may have legal recourse against brokerage firms or investment advisory firms due to such due diligence failures or other sales practice violations. It’s important to note that filing an arbitration claim does not prevent an investor from receiving potential future distributions from the GPB funds.

Investors can potentially recover investment losses by filing claims against broker-dealers or investment-advisory firms that sold GPB private placement offerings for large commissions.

Through 2021, GPB Capital investors have won over $2.4 million in monetary awards in 10 out of 12 (over 83%) arbitration claims that have proceeded to a final hearing.

What Can GPB Investors Do?

Iorio Altamirano LLP, a leading securities arbitration law firm based in New York, NY, is investigating claims on behalf of defrauded investors who were victims in the GPB funds scheme. Investors who have purchased GPB Automotive, GPB Holdings, GPB Holdings II, or GPB Waste Management through a broker or brokerage firm have successfully recovered investment losses by filing securities arbitration claims.

Our law firm pursues FINRA arbitration claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by financial advisors and brokerage firms.

Iorio Altamirano LLP is actively investigating claims on behalf of GPB investors who purchased the security through a broker-dealer or registered investment advisor, including:

• Aegis Capital Corp.
• Aeon Capital Inc.
• American Capital Partners
• Arkadios Capital
• Ausdal Financial Partners, Inc.
• Avere Financial Group, LLC
• Axiom Capital Management, Inc
• BCG Securities, Inc.
• Cabot Lodge Securities LLC
• Calton & Associates, Inc.
• Capital Financial Services, Inc
• Capital Investment Group, Inc.
• Cascade Financial Management, Inc.
• Crystal Bay Securities, Inc.
• David A. Noyes & Company
• Dempsey Lord Smith, LLC
• Detalus Securities, LLC
• DFPG Investments, Inc.
• DH Hill Securities, LLLP
• Dinosaur Financial Group, L.L.C.
• Geneos Wealth Management, Inc.
• Emerson Equity LLC
• Financial West Group
• Great Point Capital LLC
• HighTower Securities, LLC
• IBN Financial Services, Inc.
• Innovation Partners, LLC
• International Assets Advisory, LLC
• Investment Architects, Inc.
• Kingsbury Capital, Inc.
• Landolt Securities, Inc.
• Lion Street Financial, LLC
• Lowell & Company, Inc.
• McDonald Partners LLC
• MML Investor Services
• Moloney Securities Co., Inc.
• Money Concepts Capital Corp
• MSC – BD, LLC
• National Securities Corporation
• Newbridge Securities Corporation
• Orchard Securities, LLC
• Pariter Securities, LLC
• Purshe Kaplan Sterling Investments
• Private Client Services, LLC
• Royal Alliance Associates, Inc.
• SagePoint Financial, Inc.
• Sandlapper Securities, LLC
• Silber Bennett Financial, Inc.
• Stephen A. Kohn & Associates, Ltd.
• Uhlmann Price Securities, LLC
• United Planners Financial Services
• Vanderbilt Securities, LLC
• Vestech Securities, Inc.
• Western International Securities, Inc.
• WestPark Capital, Inc.
• Whitehall-Parker Securities, Inc.
• Wilmington Capital Securities, LLC
• Woodbury Financial Services, Inc.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses. Our law firm has helped GPB investors recover hundreds of thousands of dollars in losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have lost money on the GPB funds, contact securities arbitration lawyers August Iorio and Jorge Altamirano of Iorio Altamirano LLP at august@ia-law.com, jorge@ia-law.com, or toll-free at (646) 330-4624 for a free and confidential consultation and review of your legal rights.

Earlier this year, in February 2023, Centaurus Financial also agreed to pay a $750,000 civil penalty after the SEC charged the firm in connection with the unsuitable recommendation of variable interest rate structured products to retail customers. The SEC’s order found that Centaurus failed to implement, and its branch manager failed to follow, Centaurus’ customer-specific suitability procedures and that Centaurus violated the broker-dealer books and records provisions of the federal securities laws. The SEC’s order found that Centaurus violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) and Section 17(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 17a-4(e)(5), 17a-4(f)(2), and 17a-3(a)(17)(i)(B)(3) thereunder. The SEC concluded that Centaurus failed reasonably to supervise the firm’s brokers.

Financial institutions like Centaurus Financial, Inc. must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity, such as recommendations to purchase alternative investments, such as GWG L Bonds, UITs, and REITS, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

Customers of Centaurus Financial or Donnie Ingram are encouraged to contact Iorio Altamirano LLP, a securities arbitration law firm that represents investors, for a free and confidential consultation and to review their legal rights.

Iorio Altamirano LLP has also been investigating Centaurus Financial, Inc. for its sales practices related to GWG L Bonds. For the latest on the law firm’s investigation, please visit the following blog posts:

What L Bondholders Need to Know About GWG Holdings, Inc.’s Chapter 11 Plan

Broker-Dealers Sold GWG L Bonds Using Aggressive and Misleading Marketing

FINRA Disciplinary Proceeding No. 2018057298701

According to the complaint filed by FINRA’s Department of Enforcement, between September 2016 and September 2018, Donnie Ingram, a registered representative with Centaurus Financial and an investment advisor through his own SEC-registered investment advisory firm, Ingram Advisory Services, LLC (Ingram Advisory), made unsuitable recommendations to 81 customer accounts. Ingram’s recommendations caused his customers to incur unnecessary expenses of more than $300,000, providing no additional benefits to them while directly benefiting Centaurus and himself.

Ingram regularly recommended that his customers purchase “standard version” Unit Investment Trusts (UITs) instead of equivalent, lower-cost “fee-based” UITs. As a result, his customers incurred initial and deferred sales charges. These charges would have been waived if Ingram had recommended the fee-based UITs.

Other than causing the customer to incur the full transactional sales charges by purchasing the standard version UIT, there was no difference between the standard version UIT that Ingram recommended and purchased for his customers and the fee-based UIT.

According to the complaint, Ingram understood at the time he made these recommendations that he could have recommended and purchased the lower-cost fee-based UIT for his customers’ brokerage accounts. However, he recommended the higher-cost standard version UIT because it allowed him to receive as compensation a percentage of the transactional sales charge that the customer paid to the UIT sponsor, which the sponsor then paid to Centaurus as a dealer concession.

Additionally, Ingram recommended that his customers purchase Bluerock Residential Growth REIT Inc. (BRG) and MacKenzie Realty Capital, Inc. (MAC) through Centaurus instead of through Ingram Advisory, causing his customers to pay selling commissions that could have been avoided. Other than the selling commission that Ingram and Centaurus received, the underlying securities had the same features and benefits.

Ingram’s conduct violated the reasonable-basis suitability obligation in FINRA Rule 2111(a) and FINRA Rule 2010. Furthermore, Centaurus Financial failed to reasonably supervise Ingram’s recommendations of UITs, BRG, and MAC, violating FINRA Rules 3110(a), 3110(b), and 2010.

Centaurus Financial Inc.’s Supervisory System and Its Shortcomings

Centaurus Financial employed a multi-level supervisory system, which included assigned branch managers, trading principals, and Regional Compliance Supervisors (RCSs). The first level of supervision and oversight belonged to the branch manager, who was responsible for reviewing and processing orders and ensuring the suitability of recommended transactions.

During the relevant period between September 2016 and September 2018, the branch manager for Centaurus’ branch in Winter Park, Florida, was Ingram’s direct supervisor. In that capacity, the Centaurus branch manager was responsible for supervising Ingram and reviewing the suitability of his recommended transactions, including UITs, BRG, and MAC. However, the Centaurus branch manager failed to conduct a suitability review of Ingram’s investment recommendations, as he did not understand that it was his responsibility to do so. Furthermore, the Centaurus branch manager was allegedly aware of Ingram’s practice of recommending more expensive standard version UITs, BRG, and MAC through Centaurus due to the transactional sales charges and admitted that Ingram recommended the higher-cost UITs for “the compensation.”

In addition to the branch manager’s responsibilities, Centaurus’s Written Supervisory Procedures (WSPs) required a trading principal to carefully review UIT order forms for potential violations, unsuitable transactions, and other potential infractions. During the relevant period, no trading principal at Centaurus conducted any suitability review of Ingram’s UIT recommendations. The WSPs also mandated a Regional Compliance Supervisor (RCS) to review the suitability of Ingram’s investment recommendations of alternative investments or non-conventional investments (NCIs), such as BRG and MAC. The RCS responsible for Ingram’s recommendations, however, failed to consider the costs of his recommendations as part of the review.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in alternative investments such as GWG L Bonds, REITS, or UITs through Centaurus Financial, Inc., contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, you may reach the firm by phone toll-free at (646) 330-4624.

GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022.

According to court filings, in the four years before the bankruptcy filing, Western International Securities received at least $3 million in commissions from GWG Holdings for selling L Bonds to retail investors, and the firm sold approximately $13.3 million in L Bonds to retail investors between June 2020 and January 2022.

Earlier this year, the law firm filed a six-figure FINRA arbitration claim against Western International Securities connected with the sale of L Bonds. According to the claim, Western International and its broker, Heath Goldstein, allegedly gave unsuitable recommendations to a permanently disabled quadriplegic, who is 52 years old, by advising her to invest a significant portion of her irreplaceable financial assets into speculative, high-risk, illiquid, and unrated L Bonds issued by GWG Holdings, Inc. (“GWG Holdings”).

The FINRA arbitration complaint comes after the United States Securities and Exchange Commission (“SEC”) filed a lawsuit against Western International Securities and several of its brokers in federal court in June 2022 concerning the sale of L Bonds to retail customers. The firm is accused of failing to perform due diligence regarding the inherent risks associated with L Bonds issued by GWG Holdings, Inc.

The complaint alleges that Western International Securities’ brokers misunderstood important issues regarding GWG Holdings, Inc. and the GWG L Bonds, including that GWG significantly changed its business model beginning in 2018 and that GWG L Bonds were not directly collateralized by life insurance policies. According to the complaint, the brokers did not understand the product they were selling because Western International Securities did not provide them with updated and adequate training or with the due diligence report that it had commissioned to be completed. As a result, the brokers allegedly recommended GWG L Bonds to retail customers without a reasonable basis to believe that the investments were in the customers’ best interest.

Investors who purchased GWG L Bonds through Heath Goldstein, Western International Securities, or any other broker-dealer are encouraged to contact Iorio Altamirano LLP (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

Heath Goldstein (CRD No. 3031995)

Heath Goldstein has 22 years of experience in the securities industry and has been registered with Western International Securities, Inc. as a broker since June 2016.

Mr. Goldstein is also a registered investment advisor with Western International Securities and 1st Financial Investment, Inc, an investment advisory firm he owns with family members in Clark’s Summit, PA.

According to his public disclosure report, Mr. Goldstein has been the subject of at least nine customer disputes, including six disputes related to securities issued by GWG Holdings.

About the L Bonds & Brokerage Firm Liability

An L bond is a specialty high-yield bond created and issued by GWG Holdings. The L Bonds are speculative, high-risk, and illiquid securities that were sold as alternative investments.

Brokerage firms are required to make investment recommendations that are in the best interest of their customers. Financial advisors also have an obligation to be truthful and disclose all material facts and risks to customers when making investment recommendations. Firms and brokers must also conduct reasonable due diligence on the securities they offer before recommending them to customers. Iorio Altamirano LLP is investigating whether Mr. Goldstein and Western International Securities met these obligations in connection with their sale of L Bonds to retail investors.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in GWG L Bonds due to a recommendation by Heath Goldstein or Western International Securities, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, you may reach the firm by phone toll-free at (646) 330-4624.

See Also:

GWG Bankruptcy Update (March 14, 2023): GWG Appears to be Headed Toward Liquidation

Broker-Dealers Sold GWG L Bonds Using Aggressive and Misleading Marketing

“GWG Was a Classic Ponzi Scheme” – Official Committee of Bondholders of GWG Holdings, Inc.

Western International Securities Denies Violating Regulation Best Interest in Recommending and Selling Risky and Illiquid GWG L Bonds to Retail Investors

Certified Financial Planner Board Suspends Western International Securities Broker Patrick Egan After SEC Charges Related to Selling GWG L Bonds

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

In a separate action, the U.S. Attorney’s Office for the Eastern District of New York filed criminal charges against Mr. Perera. He was arrested on Monday, March 27, 2023, and arraigned on a 16-count indictment charging him with securities fraud, investment advisor fraud, wire fraud, and money laundering, in connection with a scheme to induce an investor to purchase stock in companies that traded on the NASDAQ and New York Stock Exchange (NYSE).

Customers of Mr. Perera or Aegis Capital Corp. who have suffered financial losses as a result of Mr. Perera’s negligence or misconduct can contact New York securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation and review of their legal rights.

Iorio Altamirano LLP represents investors that have disputes with their financial advisors or brokerage firms, such as Aegis Capital Corp.

Securities and Exchange Commission v. Surage Kamal Roshan Perera and Janues Capital Incorporated, 2:23-cv-02316

On March 27, 2023, the United States Securities and Exchange Commission (“SEC”) filed a lawsuit in federal court against Mr. Perera and his firm, Janues Capital Incorporated (“Janues”), alleging that from February 2022 until March 2023, Mr. Perera defrauded at least one investor (“Investor A”) out of millions of dollars by lying about investment opportunities and strategies; misappropriating the investor’s money by, in part, not purchasing the securities she subscribed to through Janues and using a substantial portion of her money to engage in high volume, highly leveraged trading in other securities; lying to her about non-existent investment profits; and concealing large trading losses.

According to the complaint, Mr. Perera falsely told Investor A that his firm had access to specific restricted securities at discounted prices through connections with large institutional investors. Investor A first met Mr. Perera through a mutual friend when Mr. Perera was a registered broker of Aegis Capital Corp.

Mr. Perera also allegedly claimed to exercise a trading strategy—which he called “options straddles”—that would not only prevent any trading losses but also, for some of the supposed investments, guarantee returns on the investment of at least 9% and up to as much as 50%. Perera’s false promises convinced the investor to give him approximately $4.3 million.

According to the lawsuit, Mr. Perera did not use Investor A’s funds to purchase the securities she had subscribed to and did not engage in the promised “options straddles” to prevent trading losses and generate the profits he had guaranteed. Instead, he transferred at least $3.5 million of Investor A’s funds to a brokerage account in the name of his wife, Nishani Alahakoon, and used those funds to engage in highly speculative, leveraged trading, which resulted in over $3 million in trading losses.

Mr. Perera allegedly concealed his misappropriation of Investor A’s funds and his trading losses by providing Investor A with phony trade confirmations and account statements that falsely showed the expected returns and by using funds received from other sources to partially repay the investor victim.

The SEC’s complaint alleges that Mr. Perera and Janues violated antifraud provisions of the federal securities laws. Mr. Perera also was charged with aiding and abetting Janues’ alleged violations. The SEC’s complaint names Nishani Alahakoon, whose brokerage account Perera and Janues traded, as a relief defendant.

Financial Advisor Surage Kamal Roshan Perera (CRD No. 4716321)

Roshan Perera had 18 years of experience in the securities industry and was associated with 11 different brokerage firms, including five different firms that have been expelled from the securities industry by the Financial Industry Regulatory Authority (“FINRA”). Mr. Perera was registered with Aegis Capital Corp from April 18, 2018, through September 12, 2018.

According to his public disclosure report with FINRA, Mr. Perera has been the subject of at least one customer dispute, which included allegations of unauthorized trading. The 2009 dispute was settled.

Investors who have disputes with their financial advisors and brokerage firms can file securities arbitration claims to resolve the disputes and seek recovery of investment losses.

FINRA’s BrokerCheck tool can be used to obtain Mr. Perera’s complete and updated disclosure report.

Aegis Capital Corp. – A Duty to Supervise

Selling away is when a financial advisor solicits a customer to participate in a private securities transaction that is “away” from the firm. In other words, when a broker recommends a transaction to buy or sell a security that is not offered or approved by the brokerage firm where the financial advisor is employed or registered.

A brokerage firm can be held responsible for its financial advisors’ conduct in “selling away” cases under certain circumstances.

Pursuant to FINRA Rule 3280, when a broker-dealer approves a private transaction away from the firm, the firm assumes legal responsibility for the trade. There are no exceptions to this rule. Broker-dealers can be held responsible for the conduct of their financial advisors in connection with these approved transactions.

Even if a transaction is not approved by a firm, a brokerage firm can also be held liable if the financial advisor acted with apparent authority or the investor reasonably believed that the advisor’s activities were approved or part of the broker’s services.

Brokerage firms like Aegis Capital Corp. must properly supervise financial advisors and customer accounts. Brokerage firms must also establish and maintain a reasonably designed system to oversee account activity, such as private securities transactions, to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

See Also:

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Aegis Capital Corp

Iorio Altamirano LLP Files GPB Automotive Claim Against Aegis Capital Corp

Aegis Capital Corp. Ordered to Pay Nearly $2.7 Million for Supervisory Failures Related to Rampant Excessive and Unsuitable Trading

How to Recover Financial Losses or Obtain a Free Consultation

If you have suffered investment losses with Mr. Perera or Aegis Capital Corp or suspect other inappropriate activity occurred in your investment or retirement account, contact New York securities arbitration attorney August Iorio of Iorio Altamirano LLP. August Iorio can be reached at august@ia-law.com or toll-free at (646) 330-4624 for a free and confidential review of your legal rights.

Iorio Altamirano LLP is a securities arbitration law firm based in New York, NY. Iorio Altamirano LLP pursues FINRA claims nationwide on behalf of investors to recover financial losses arising out of wrongful conduct by stockbrokers and brokerage firms.

However, much of the court filing, including specific allegations of wrongdoing, was filed under seal.

On February 1, 2023, the United States Bankruptcy Court for the Southern District of Texas unsealed several significant court filings, including a draft adversary legal complaint against certain current and/or former directors and officers of GWG Holdings, Inc., individuals, and corporate entities affiliated with or controlled by Brad Heppner, transferees of certain fraudulent transfers, and key broker-dealers who marketed and sold L Bonds.

The unsealed complaint includes claims against the following broker-dealers: Emerson Equity, LLC, Centaurus Financial, Inc, Center Street Securities, Inc., Western International Securities, Inc., NI Advisors, Inc., Moloney Securities Co., Inc., Interest International Equities Corporation, Arete Wealth Management, LLC, Westpark Capital, Inc. Ausdal Financial Partners, Cabot Lodge Securities, LLC, and Portsmouth Financial Services.

The unsealed complaint has revealed the following allegations, which were made after the bondholder committees’ investigation, which included access to information that is not in the public domain:

• Together with other insiders, Brad Heppner was the mastermind behind a Ponzi scheme whereby GWG, in conjunction with its broker-dealer network, sold hundreds of millions worth of L Bonds to retail investors even when it became clear that the only way to repay those investors was to sell yet more L Bonds to more retail investors.
• The engine for this massive Ponzi scheme was not only the large sales force employed by GWG but also a nationwide group of broker-dealers that marketed and sold L Bonds to unsuspecting investors.
• These broker-dealers worked closely with GWG, which paid the broker-dealers hefty commissions to ensure a constant flow of new L Bondholders investing cash into GWG despite GWG’s effective inability to repay them in full.
• Many L Bond holders automatically “renewed” their investment in L Bonds, in which case GWG did not repay the principal to the investor, although it did routinely pay additional commissions to broker-dealers on these renewals. Broker-dealers were incentivized to ensure that no investors ever actually “cashed out” of L Bonds, which allowed them to continue selling new L Bonds and keep new cash coming into GWG, thus perpetuating the Company’s Ponzi scheme.
• In the four years leading up to the Petition Date, the 12 largest broker-dealer recipients of commission payments received at least $42 million from GWG, all while GWG was sliding deeper into insolvency, becoming more reliant on sales of new L Bonds to stay afloat and satisfy maturity and interest payments to existing L Bondholders, and transferring hundreds of millions of dollars in cash to Ben and Ben’s affiliates in exchange for speculative equity interests in these entities.
• The following chart shows the commission received by the 12 largest recipients of commissions from GWG Holdings for brokerage services in the four years leading up to the bankruptcy filing.

• All of the Broker-Dealer Commissions were paid from proceeds of L Bond sales.
• Brad Heppner needed to recruit a steady stream of new investors in order to service GWG’s increasingly large debt obligations. GWG was resigned to paying its debts through additional debt in the form of L Bonds. Unlike a loan, GWG did not need to prove its ability to pay back the L Bonds—it just needed a sales pitch. GWG provided such a pitch to investors and broker-dealers by highlighting GWG’s perfect record of never missing a principal or interest payment on L Bonds. Unbeknownst to investors, however, GWG could only achieve this “perfect” record by aggressively recruiting new investors to pay off the old. GWG had no positive cash flow with which to sustain the Life Portfolio—much less to pay the interest, commissions, and other operational expenses required to sell L Bonds.
• The result was a business model with all the hallmarks of a classic Ponzi scheme. L Bonds purchased by later investors generated artificially high returns for older L Bondholders, whose return on investment was then marketed to encourage more L Bond purchases. The Company continuously sold new L Bonds to repay existing L Bondholders—knowing full well that it would have to sell yet more new L Bonds to repay its increasing debt, and without any reason to expect a turnaround in the Life Portfolio or the value of its investment in Ben to materialize.
• GWG’s relationship with the Broker-Dealers worked as follows. GWG entered into a Dealer Management Agreement with the registered broker-dealer Emerson Equity. As GWG’s “dealer manager,” Emerson Equity agreed to offer and sell L Bonds on a “best-efforts” basis and entered into Soliciting Dealer Agreements with certain other Broker-Dealers that were members of FINRA (the “Selling Group Members”). The Selling Group Members were authorized to sell L Bonds pursuant to their agreements with Emerson Equity. Each Broker-Dealer Defendant was a Seller Group Member.
• GWG Holdings paid the Broker-Dealer Defendants a selling commission ranging from 0.75% to 6% of the principal amount of L Bonds they sold (the exact commission depended on the L Bonds’ maturity date, which ranged from six months to seven years). Each Broker-Dealer Defendant received commission payments directly from GWG Holdings. The Seller Group Members were also entitled to “additional compensation” (also paid by GWG Holdings) of up to 3% of gross offering proceeds as reimbursement for accountable out-of-pocket expenses incurred in offering and selling L Bonds. Given these financial incentives, the Broker-Dealer Defendants were strongly encouraged to maximize L Bond sales and ensure that customers reinvested any proceeds from L Bond maturities into new L Bonds—a key requirement in order to keep the Ponzi scheme going.
• After entering into their respective Soliciting Dealer Agreements with Emerson, Seller Group Members (including the Broker-Dealer Defendants) required regular communications and updates from GWG to stay apprised (and keep their customers, retail investors in L Bonds, apprised) of the Company’s business and its attendant impact on the prospects of L Bonds. This was the responsibility of GWG’s national product sales team (the “GWG Sales Team”), which provided marketing materials and other relevant information about L Bonds (which were prepared and reviewed by GWG) to Seller Group Members.
• The GWG Sales Team comprised “internal wholesalers” and “external wholesalers.” The wholesalers were employees of Ben who assisted GWG and Emerson with the marketing and sale of L Bonds. The wholesalers provided services to GWG and received a base salary from Ben pursuant to the Shared Services Agreement between GWG and Ben. Although they were employees of Ben, the wholesalers registered their FINRA licenses with Emerson, and Emerson held the licenses for and oversaw the national selling activities of the GWG Sales Team. Emerson paid the GWG Sales Team commissions based on the Seller Group Members’ L Bond sales.
• GWG used “internal” and “external” wholesalers for marketing L Bonds to the Seller Group Members. “Internal” wholesalers communicated with registered representatives of the Seller Group Members and booked appointments for “external” wholesalers to meet with these representatives. The external wholesalers then provided these representatives with information regarding L Bonds and established themselves as the representatives’ point of contact within GWG. The registered representatives then placed orders for L Bonds on behalf of their retail investor clients.
• In marketing L Bonds, GWG’s external wholesalers provided marketing materials and made presentations to Seller Group Members and their registered representatives. Wholesalers also spent GWG’s funds entertaining registered representatives with conferences, dinners, and the like.
• Merriah Harkins (“Harkins”), GWG’s Executive Vice President of Retail Capital Markets, oversaw these marketing efforts. Harkins is also a registered representative of Emerson Equity. Harkins and the GWG Sales Team held weekly meetings to discuss L Bond marketing and sales. These weekly meetings were usually attended by internal and external wholesalers, representatives of Emerson, and, on numerous occasions, Evans and Holland. Holland routinely reviewed marketing materials prepared for the Seller Group Members and their registered representatives to verify the propriety of any material disclosures.
• The GWG Board kept close tabs on L Bond sales, including the activity of Broker-Dealers. In addition to overseeing the marketing of L Bonds to Seller Group Members, Harkins, and the GWG Sales Team prepared detailed internal reports regarding L Bond sales and the activity of Broker-Dealers (including but not limited to Seller Group Members). Among other things, these reports showed L Bond sales projections by month, actual sales performance, the number of L Bonds sold by specific Seller Group Members, and the number of L Bonds sold in specific geographic regions, among other things. The GWG Sales Team regularly provided such reports directly to the GWG Board. Harkins and other members of the GWG Sales Team personally appeared at numerous GWG Board meetings to present their reports.
• At the October 29, 2020 meeting of the GWG Board, a “Sales & National Accounts Results” presentation reported 14% growth in L Bond sales year over year, including $42.9 million in sales in September 2020. The presentation also described GWG’s “plan to achieve 2020/2021 goals,” which included a “methodical, numbers-driven expansion plan” to reach a 12-month goal of $750 million in L Bond sales. This plan would involve “measur[ing] activity and sales performance against goals to promote a high level of compliant activity.” The plan also envisioned doubling the number of Broker-Dealer representatives and RIAs to 10,000 by June 30, 2021, and again to 20,000 by September 30, 2021. There is no indication that the GWG Board ever considered hitting the brakes on L Bond sales and Broker-Dealer/RIA activity, given GWG’s obvious insolvency.
• There was significant interest by the GWG Board surrounding the sale of L Bonds. For example, on at least one occasion, in August 2019, the Second Special Committee of the GWG Board asked Harkins what impact the Company’s use of L Bond proceeds to fund transactions with Ben would have on demand for L Bonds.
• In addition to receiving reports from the GWG Sales Team, the GWG Board received direct communications from Emerson Equity on at least one occasion, in February 2021, when Emerson Equity sent a memo regarding its “Analysis of Investors Purchasing GWG L Bonds.” The memo purported “to determine the financial profile of the L Bond investors” and highlighted that the “average investment size in our current series of the L Bond (Series 3) is $46,895.” The memo proceeded to discuss the general marketing and sales practices of Seller Group Members.
• The victims of this scheme (unlike Heppner, who is a reported billionaire) are the approximately 27,000 L Bondholders. These Bondholders are mainly small retail investors, including retired and elderly individuals, with the average individual L Bondholder owning just $45,000 worth of L Bonds. These stakeholders invested their savings with the expectation that the Debtors’ L Bonds were safe investments that would provide periodic interest payments and satisfaction of their principal at maturity—an expectation that was thwarted by Heppner’s scheme and the Defendants’ misconduct. Instead of providing a comfortable income stream for their retirement, the L Bondholders’ investments in GWG became the piggybank for Ben’s speculative business plans and the massive array of trusts and entities under Heppner’s control.
• The financial burden caused by the scheme has fallen solely on the shoulders of the L Bondholders, who find themselves in financial ruin through no fault of their own.

As GWG Holdings, Inc. continues to navigate the bankruptcy process, with many questions remaining for L bondholders, our law firm remains ready to help GWG L bond investors file meritorious arbitration claims to recover their losses against broker-dealers. We continue to help GWG L Bond investors recover their losses.

Iorio Altamirano LLP (gwglawyer.com), a law firm that represents retail investors, is representing many GWG L Bond investors against brokerage firms across the country to recover investment losses and damages sustained by those firms’ recommendations to invest in GWG L Bonds. Based on the law firm’s investigation, there appears to have been widespread negligence and misconduct by many brokers and broker-dealers across the country.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

See Also:

“GWG Was a Classic Ponzi Scheme” – Official Committee of Bondholders of GWG Holdings, Inc.

GWG Bankruptcy Update: Questions Remain as to When, or If, GWG L Bond Investors Will Receive Future Distributions

GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim

SEC Finds That Some Broker-Dealers Are Using Outdated, Incomplete, and Inaccurate Risk Disclosures

Brokerage Firm Liability

An L bond is a financial product created by GWG Holdings, Inc. (GWGH). The L Bonds are speculative, high-risk, illiquid, and unrated alternative investment offerings.

Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG sold the L bonds through Emerson Equity LLC and a network of regional broker-dealers, who pitched the products to individual retail investors. The network of regional broker-dealers who sold L Bonds and shared in the selling commissions included the following firms, as well as other broker-dealers:

• Centaurus Financial, Inc.
• Great Point Capital LLC.
• National Securities Corporation.
• Western International Securities, Inc.
• Aegis Capital, LLC.
• Newbridge Securities Corporation.
• Dempsey Lord Smith, LLC.
• Coastal Equities, Inc.
• International Assets Advisory, LLC.
• Arete Wealth Management, LLC.
• Capital Investment Group, Inc.
• Lifemark Securities, Corp.
• Westpark Capital, Inc.
• Ausdal Financial Partners, Inc.
• American Trust Investment Services, Inc.
• Moloney Securities.
• IFP Securities, LLC.
• Center Street Securities.
• Cabot Lodge Securities LLC.
• Kingswood Capital Partners, LLC.
• American Trust Investment Services, Inc.
• SW Financial.
• Paulson Investment Company LLC.
• Ages Financial Services, LTD.
• Independence Capital Co., Inc.
• Landolt Securities, Inc.
• Intervest International Equities Corporation.
• Titan Securities.
• NI Advisors.
• JRL Capital Corporation.
• The FIG Group, LLC.
• M Stevens Securities, LLC.
• TFS Securities, Inc.
• Integrity Brokerage, LLC.
• American Equity Investment Corporation.
• Portsmouth Financial Services.

Brokerage firms are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. There are serious concerns that some broker-dealers recommended GWG’s L Bonds to customers without first conducting sufficient due diligence on the GWG L bonds or GWGH.

Investors who purchased GWG L Bonds through a financial advisor are encouraged to contact Iorio Altamirano LLP (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in L Bonds offered by GWG Holdings, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

Reg BI requires that brokerage firms and brokers act in the best interest of a retail customer at the time of a recommendation to purchase, sell, or hold a security or investment strategy. The broker-dealer and broker must place their retail customers’ interest ahead of their own financial interest. The standard of care also applies to recommendations of account types.

Reg BI requires compliance with four component obligations:

1. Disclosure Obligation: Firms and brokers are required to provide certain disclosures before or at the time of the recommendation about the recommendation and the relationship between the retail customer and the broker-dealer.
2. Care Obligation: Firms and brokers are required to exercise reasonable diligence, care, and skill in making a recommendation, including understanding the potential risks, rewards, and costs associated with a recommendation and having a reasonable basis to believe that the recommendation is in the best interest of a retail customer.
3. Conflict of Interest Obligation: Broker-dealers are required to establish, maintain, and enforce written policies and procedures reasonably designed to identify and address conflicts of interest.
4. Compliance Obligation: Broker-dealers are required to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with Regulation Best Interest.

SEC Warns Broker-Dealers That Policies and Procedures Must Be Specific When Outdated Disclosures Need to be Updated

In connection with conducting regulatory examinations of broker-dealers, the SEC observed that some broker-dealers did not have written policies and procedures reasonably designed to achieve compliance with the Disclosure Obligation. Specifically, the SEC noted that some brokerage firms’ written policies and procedures did not specify when disclosures should be created or updated (i.e., when the disclosures contain materially outdated, incomplete, or inaccurate information) or how the updated disclosures should be delivered. For example, according to the SEC’s risk alert, some policies and procedures did not identify the parties responsible for creating or updating disclosures, how to identify that material changes have occurred, or when material changes should result in new or updated disclosures.

In practice, while representing investors who have been harmed by the conduct of broker-dealers, our law firm has observed the same failures by brokerage firms. Most recently, we have observed that many broker-dealers maintained and used outdated risk disclosure materials when recommending GWG L Bonds after GWG Holdings Inc., the issuer of the bonds, completely changed its business model in 2018. As a result, brokers were recommending, and customers were purchasing bonds based on outdated, incomplete, and inaccurate information.

Had the brokerage firms’ policies and procedures specified when the GWG L Bond disclosures should have been updated, how the updated disclosures should have been delivered, and who was responsible for monitoring the security for material changes, customers would have been able to make informed decisions about whether they were willing to invest in the speculative, high-risk, illiquid, and unrated GWG L Bonds.

Instead, thousands of retail investors purchased billions of dollars of GWG L Bonds, following the recommendation of their financial advisors, and have suffered significant losses after GWG Holdings, Inc. defaulted on their debt obligations in January 2022 and filed for Chapter 11 bankruptcy in April 2022.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

See Also:

“GWG Was a Classic Ponzi Scheme” – Official Committee of Bondholders of GWG Holdings, Inc.

GWG Bankruptcy Update: Questions Remain as to When, or If, GWG L Bond Investors Will Receive Future Distributions

GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim

Brokerage Firm Liability

An L bond is a financial product created by GWG Holdings, Inc. (GWGH). The L Bonds are speculative, high-risk, illiquid, and unrated alternative investment offerings.

Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG sold the L bonds through Emerson Equity LLC and a network of regional broker-dealers, who pitched the products to individual retail investors. The network of regional broker-dealers who sold L Bonds and shared in the selling commissions included the following firms, as well as other broker-dealers:

• Centaurus Financial, Inc.
• Great Point Capital LLC.
• National Securities Corporation.
• Western International Securities, Inc.
• Aegis Capital, LLC.
• Newbridge Securities Corporation.
• Dempsey Lord Smith, LLC.
• Coastal Equities, Inc.
• International Assets Advisory, LLC.
• Arete Wealth Management, LLC.
• Capital Investment Group, Inc.
• Lifemark Securities, Corp.
• Westpark Capital, Inc.
• Ausdal Financial Partners, Inc.
• American Trust Investment Services, Inc.
• Moloney Securities.
• IFP Securities, LLC.
• Center Street Securities.
• Cabot Lodge Securities LLC.
• Kingswood Capital Partners, LLC.
• American Trust Investment Services, Inc.
• SW Financial.
• Paulson Investment Company LLC.
• Ages Financial Services, LTD.
• Independence Capital Co., Inc.
• Landolt Securities, Inc.
• Intervest International Equities Corporation.
• Titan Securities.
• NI Advisors.
• JRL Capital Corporation.
• The FIG Group, LLC.
• M Stevens Securities, LLC.
• TFS Securities, Inc.
• Integrity Brokerage, LLC.
• American Equity Investment Corporation.

Brokerage firms are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. There are serious concerns that some broker-dealers recommended GWG’s L Bonds to customers without first conducting sufficient due diligence on the GWG L bonds or GWGH.

Investors who purchased GWG L Bonds through a financial advisor are encouraged to contact Iorio Altamirano LLP (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in L Bonds offered by GWG Holdings, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

The unsealed complaint has revealed the following allegations, which were made after the bondholder committees reviewed documents and information that are currently not in the public domain:

• Together with other insiders, Brad Heppner was the mastermind behind a Ponzi scheme whereby GWG, in conjunction with its broker-dealer network, sold hundreds of millions worth of L Bonds to retail investors even when it became clear that the only way to repay those investors was to sell yet more L Bonds to more retail investors.
• The proceeds from those L Bond sales were then funneled by GWG to the Beneficient Company Group, LP (“Ben”) (or entities associated with Ben), the unrealized brainchild of Heppner. In large part, Ben used the funds it received from GWG to pay back debt accumulated by a Heppner-affiliated entity long before GWG entered the picture. This scheme was enabled by a complicit and interested board of directors of GWG Holdings (the “GWG Board”). As one former member of the GWG Board testified, Heppner “[c]ontrolled it all. He was the chairman of the board, he picked the board members, he picked the employees. There was no one else. It was him. It was Brad who was in control of all this.”
• Over the course of three years from 2019 through 2021, the Company transferred at least $285 million in the L Bondholders’ investments as well as hundreds of millions of non-cash consideration to Ben, a nascent and perennially unproven company.
• Since April of 2019, Ben—and thus Heppner—directed the appointment of the entire GWG Board. Heppner served as the chair of the GWG Board while also serving as the chair of Ben’s board of directors and CEO of Ben. The GWG Board was therefore a Ben-controlled board and often a conflicted and interested one, approving transactions not for the benefit of GWG but instead for the benefit of Ben and Heppner, at a time when GWG was insolvent.
• GWG—led and controlled by Heppner and Ben—was the epitome of a Ponzi scheme. GWG was required to sell new L Bonds to make principal and interest payments due on older L Bonds because GWG itself was from the outset a failing business, never able to generate revenue even close to sufficient to satisfy its earlier-incurred L Bond obligations.
• The engine for this massive Ponzi scheme was not only the large sales force employed by GWG but also a nationwide group of broker-dealers that marketed and sold L Bonds to unsuspecting investors. These broker-dealers worked closely with GWG, which paid the broker-dealers hefty commissions to ensure a constant flow of new L Bondholders investing cash into GWG despite GWG’s effective inability to repay them in full.
• In the four years leading up to the bankruptcy filing, the 12 largest broker-dealer recipients of commission payments received at least $42 million from GWG, all while GWG was sliding deeper into insolvency, becoming more reliant on sales of new L Bonds to stay afloat and satisfy maturity and interest payments to existing L Bondholders, and transferring hundreds of millions of dollars in cash to Ben and Ben’s affiliates in exchange for speculative equity interests in these entities.
• The constant sale of new L Bonds that GWG could never repay was not concerning to Ben or its insiders because Ben is not a named guarantor of the L Bonds. To Ben, GWG was merely a tool to funnel cash ostensibly to fund Ben’s nascent business, a business that to this day remains aspirational and unrealized. Ben’s rosy projections, none of which have even come close to fruition, were based on events that never occurred and have yet to occur. Importantly, little if any of the cash Ben received from GWG’s L Bond sales went to fund Ben’s nascent business; rather, it was largely used to pay Heppner and certain Heppner-associated entities on account of debt placed on Ben’s books in 2017 that does not appear to represent an actual cash infusion at that time. These actions were taken at the expense of GWG, which was at all relevant times insolvent.
• The victims of this scheme (unlike Heppner, who is a reported billionaire) are the approximately 27,000 L Bondholders. These Bondholders are mainly small retail investors, including retired and elderly individuals, with the average individual L Bondholder owning just $45,000 worth of L Bonds. These stakeholders invested their savings with the expectation that the Debtors’ L Bonds were safe investments that would provide periodic interest payments and satisfaction of their principal at maturity—an expectation that was thwarted by Heppner’s scheme and the Defendants’ misconduct. Instead of providing a comfortable income stream for their retirement, the L Bondholders’ investments in GWG became the piggybank for Ben’s speculative business plans and the massive array of trusts and entities under Heppner’s control.
• The harm resulting from the Challenged Insider Transactions has fallen solely on the shoulders of the L Bondholders, who find themselves in financial ruin through no fault of their own.

Original Post:

“GWG Was a Classic Ponzi Scheme” – Official Committee of Bondholders of GWG Holdings, Inc.

In a court filing made on December 15, 2022, in the Chapter 11 bankruptcy court, the Official Committee of Bondholders of GWG Holdings Inc. (“Bondholder Committee”) alleged that GWG Holdings was a “classic Ponzi scheme.” Specifically, the Bondholder Committee alleged that GWG Holdings was a “multiyear-long fraud orchestrated by Brad Heppner to enrich himself and associated corporate entities by plundering the debtors.” The allegations are significant in that they were made after the bondholder committees’ investigation, which included access to information that is not in the public domain. The following are several key excerpts from the court filing:

• Through no fault of their own, many of these L Bondholders face financial ruin because GWG Holdings, Inc., through a group of select broker-dealers, aggressively and misleadingly marketed and sold L Bonds even after it became clear that its business was failing and the only way to repay those bondholders was to continue to sell yet more L Bonds to existing and additional retail investors. Put simply, GWG was a classic Ponzi scheme.
• Heppner then caused GWG to funnel hundreds of millions to the Beneficient Company Group, LP (“Ben”)—Heppner’s fledgling and nascent company—and Ben’s affiliates, notwithstanding Ben’s persistent failure to develop a viable business plan or come even remotely close to meeting any of its fanciful projections. Ben and Heppner were able to siphon funds out of GWG through a series of deeply conflicted, related-party transactions in which Ben and Heppner stood on both sides via their controlling shareholder position at GWG.
• Following the closing of the auction transaction, GWG’s equity immediately sat behind over $1 billion in debt and preferred equity owned mostly by Heppner, ensuring that no matter what occurred with Ben’s business, Heppner operated without risk.
• GWG gained no meaningful consideration in exchange for the Challenged Insider Transactions, which generally consisted of receiving only equity in Ben that was subordinate to other substantial existing debt and preferred equity. Indeed, GWG did not receive cash repayments for virtually any loans made to Ben, which were eventually almost always converted into capital contributions.
• Notwithstanding the fact that neither GWG nor Ben had a viable business plan, let alone positive cash flow, Heppner, and the associated broker-dealers, were all too happy to keep the scheme alive by continuing to sell L Bonds that had no prospect for repayment. And, in fact, this scheme would likely have continued but for the fact that the Securities and Exchange Commission (“SEC”) commenced an investigation, which ultimately became public. As a result, L Bond sales abruptly stopped. Once GWG could no longer sell new L Bonds to pay off its old L Bond liabilities, the house of cards collapsed and bankruptcy was the only option. GWG filed for chapter 11 protection on April 20, 2022.
• Unsurprisingly, Ben escaped unscathed. Mere months before GWG was forced to file for bankruptcy, Ben “de-coupled” from GWG, becoming an independent company. GWG again received nothing but Ben equity interests that were indisputably exchanged for far less than reasonably equivalent value. The result of this spin-off, like all of Heppner’s actions, was to ensure that Heppner (a purported billionaire) came out ahead and maintained his fortune. Heppner’s gains come at the expense of approximately 27,000 L Bondholders—in many cases “mom and pop” retail investors lured by overconfident and misleading sales pitches by broker-dealers working at the ultimate direction of Heppner. Instead of providing a comfortable income stream for their retirement, the L Bondholders’ investments in GWG became the piggybank for Ben’s speculative business plans and the massive array of trusts and entities under Heppner’s control.

The latest allegations come after GWG Holdings, Inc.’s President and CEO, Mr. Murray Holland, and its CFO and Treasurer, Mr. Timothy Evans, resigned from the company on November 14, 2022. On December 1, 2022, Mr. Holland also resigned from the company’s board of directors. The resignations came after the Investigations Committee, appointed by the bankruptcy court, concluded and alleged that GWG, under the leadership of Mr. Holland and Mr. Evans, submitted a public filing to the Securities and Exchange Commission (SEC) in March 2021 that contained material and false information. Specifically, on March 11, 2021, GWG filed a Form 8-K to report the resignations of three directors. The Form 8-K incorrectly stated that the resignations were not due to any disagreement with the company. The three directors were part of a Special Committee of the Board formed by the board of directors in 2021 to review and approve or reject potential transactions with The Beneficient Company Group, L.P. (“Beneficient”). The three board members had disagreements with GWG management about the funding of Beneficient through preferred shares. The full board of directors dissolved the Special Committee and confirmed the Beneficient investment.

The judge in the bankruptcy proceeding has stated at a recent hearing that he finds the allegations to be colorable. He appears concerned that Brad Heppner, the current CEO and Chairman of the Board for The Beneficient Company Group, was a member of both GWG’s and Beneficient’s board of directors at the time that GWG made the alleged false statement to the SEC and investors. The alleged conduct was repeatedly referred to at the bankruptcy hearing as alleged “criminal or quasi-criminal” conduct.”

In light of the information that has come to light over the past couple of months, GWG L Bond investors have the right to be concerned that GWG’s proposed reorganization plan significantly relies on the success of Beneficient, which is run by Mr. Heppner. Mr. Heppner had a significant role at both GWG and Beneficient; he was a member of both companies’ boards of directors during GWG’s collapse, which led to GWG’s bankruptcy filing. GWG L Bond investors also have the right to be worried that GWG’s proposed reorganization plan contains broad releases and exculpations for many individuals and entities at the heart of alleged wrongdoing.

As GWG Holdings, Inc. continues to navigate the bankruptcy process, with many questions remaining for L bondholders, our law firm remains ready to help GWG L bond investors file meritorious arbitration claims to recover their losses against broker-dealers. We continue to help GWG L Bond investors recover their losses.

Iorio Law PLLC, a law firm that represents retail investors, is representing many GWG L Bond investors against brokerage firms across the country to recover investment losses and damages sustained by those firms’ recommendations to invest in GWG L Bonds. Based on the law firm’s investigation, there appears to have been widespread negligence and misconduct by many brokers and broker-dealers across the country.

Investors who purchased GWG L Bonds through a financial advisor are encouraged to contact Iorio Law PLLC (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

See Also:

Broker-Dealers Sold GWG L Bonds Using Aggressive and Misleading Marketing

GWG Bankruptcy Update: Questions Remain as to When, or If, GWG L Bond Investors Will Receive Future Distributions

GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim

GWG Could Sell Its Portfolio of Life Insurance Policies for $610 Million, $1 Billion Less Than It Owes to GWG L Bond Investors

Western International Securities Denies Violating Regulation Best Interest in Recommending and Selling Risky and Illiquid GWG L Bonds to Retail Investors

Newbridge Securities Corporation’s Customers Who Purchased GWG L Bonds Are Worried About Their Invested Capital

Law Firm Investigating Dempsey Lord Smith, LLC for the Sale of GWG L Bonds and GPB Capital Funds

Law Firm Investigating National Securities Corporation for the Sale of GWG L Bonds and GPB Capital Funds

Certified Financial Planner Board Suspends Western International Securities Broker Patrick Egan After SEC Charges Related to Selling GWG L Bonds

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

New York Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Great Point Capital LLC

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Aegis Capital Corp

GWG Holdings, Inc. to be Delisted from The Nasdaq Stock Market; Law Firm Investigates Legal Claims for GWG L Bond Investors

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in L Bonds offered by GWG Holdings, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

The case, which is being litigated in the United States District Court of the Central District of California, is being closely watched by investors and the securities industry alike because it is the first substantive enforcement action brought by the SEC against a broker-dealer since Reg BI went into effect on June 30, 2020.

See Also: Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

Despite the regulation being in effect for almost two years, Western International’s primary defense appears to be that the SEC violated Western International Securities’ due process rights by failing to provide the firm with fair notice that its conduct violated Reg BI. Specifically, Western International Securities claims that the SEC’s Complaint accuses the firm of violating standards under Reg BI that the SEC has never articulated. However, as many observers have noted, the SEC’s allegations set forth allegations of misconduct that could have been brought under FINRA’s suitability rule, the predecessor standard of care owed by broker-dealers and brokers when recommending a security, because of the many overlaps between Reg BI and the suitability rule.

For example, both Reg BI and FINRA’s suitability rule require that firms and brokers conduct reasonable diligence to understand the products they recommend to retail investors. In recommending a securities transaction, Reg BI requires firms and brokers to exercise reasonable diligence, care, and skill to understand the potential risks, rewards, and costs associated with the recommendation. Similarly, FINRA’s suitability rule requires firms to have a reasonable basis to believe that a recommended security or investment strategy is suitable for at least some investors. FINRA has stated that “reasonable diligence” means that the firm’s and broker’s due diligence “must provide the firm or associated person with an understanding of the potential risks and rewards of the recommended security or strategy.”

Stated simply, both Reg BI and FINRA’s suitability rule require brokers and firms to understand what they are recommending and selling to retail investors. Accordingly, in our view, Western International Securities and its brokers had ample notice of the standard care expected of them.

The SEC’s Complaint alleged that Western International Securities and five of its brokers misunderstood important issues regarding GWG Holdings, Inc. and the GWG L Bonds, including that GWG significantly changed its business model beginning in 2018 and thus did not understand key risks associated with L Bonds and GWG.

Notably, Western International only required its brokers to take a training course on L Bonds before recommending them to customers, but it did not require its brokers to take any subsequent training regarding L Bonds. The firm also did not provide its brokers with a due diligence report that it had commissioned by a third party. Western International admits these facts in the Answer.

Consequently, brokers appeared to be totally unaware that GWG Holdings had completely changed its business model. In turn, customers were told they were investing in a security issued by a company in the life settlements business, not a company that invested in risky startup ventures, including Beneficient Company Group, L.P, a company that offered liquidity solutions to high net-worth individuals.

Western International Securities’ conduct is consistent with our law firm’s investigation, which has included speaking with over 100 GWG L Bond investors from across the country. That is, brokers did not understand the product they were selling, and there were widespread failures by brokers and firms to provide fair and balanced point-of-sale disclosure regarding fees, costs, and risk to retail investors.

Investors who purchased GWG L Bonds through Western International Securities or any other broker-dealer are encouraged to contact Iorio Altamirano LLP (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

About GWG L Bonds

An L bond is a financial product created by GWG Holdings, Inc. The L Bonds are speculative, high-risk, and illiquid alternative investment offerings.

Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.

GWG L Bonds were likely not suitable for investors with a low-to-moderate risk tolerance or investors who had liquidity needs.

In January 2022, GWG stopped making interest and maturity payments to GWG L Bond investors.

On April 20, 2022, GWG filed for Chapter 11 bankruptcy. According to the bankruptcy filings, the SEC has been investigating the sales practices of brokerage firms related to GWG L Bonds. In its Answer, Western International Securities disclosed that it received a document subpoena on July 9, 2021. The subpoena sought documents from the firm related to the sale of GWG L Bonds.

Last month, the bankruptcy judge allowed GWG Holdings Inc. to enter into a new debtor-in-possession (“DIP”) financing package. The new DIP financing package includes an option for GWG Holding Inc. to sell its portfolio of life insurance policies for at least $610 million, approximately $1 billion less than GWG Holding Inc’s outstanding obligations to GWG L Bondholders.

Even though the portfolio of life insurance policies does not directly secure the GWG L Bonds, this development is significant for GWG L Bond investors because GWG Holdings Inc.’s largest tangible asset is its portfolio of life insurance policies. It is believed that the value of these tangible assets will significantly impact the outcome of GWG Holdings Inc.’s restructuring effort through its filing for Chapter 11 bankruptcy.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

See Also:

GWG Could Sell Its Portfolio of Life Insurance Policies for $610 Million, $1 Billion Less Than It Owes to GWG L Bond Investors

GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim

Newbridge Securities Corporation’s Customers Who Purchased GWG L Bonds Are Worried About Their Invested Capital

Law Firm Investigating Dempsey Lord Smith, LLC for the Sale of GWG L Bonds and GPB Capital Funds

Law Firm Investigating National Securities Corporation for the Sale of GWG L Bonds and GPB Capital Funds

Certified Financial Planner Board Suspends Western International Securities Broker Patrick Egan After SEC Charges Related to Selling GWG L Bonds

New York Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Great Point Capital LLC

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Aegis Capital Corp

GWG Holdings, Inc. to be Delisted from The Nasdaq Stock Market; Law Firm Investigates Legal Claims for GWG L Bond Investors

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

About Iorio Altamirano LLP

Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential securities arbitration claims or lawsuits against Western International Securities, Inc. for its sale of L Bonds issued by GWG Holdings, Inc. The law firm currently represents a Western International Securities customer to whom the firm sold GWG L Bonds.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in GWG L Bonds through Western International Securities, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

On March 21, 2022, the Financial Industry Regulatory Authority (FINRA) ordered Dempsey Lord Smith, LLC (“Dempsey Lord Smith”) to pay nearly $100,000 in monetary fines and restitution for negligently omitting to tell four investors in an offering related to GPB Capital Holdings, LLC (“GPB Capital”) that the issuer failed to timely make required filings with the Securities and Exchange Commission (“SEC”), including filing audited financial statements. In addition, FINRA accused Dempsey Lord Smith of making unsuitable recommendations of GPB Capital securities to four investors. Dempsey Lord Smith consented to the sanctions.

Additionally, upon information and belief, Dempsey Lord Smith was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022. Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

Investors who purchased GWG L Bonds or any GPB Capital Funds through Dempsey Lord Smith, LLC or any other broker-dealer are encouraged to contact Iorio Altamirano LLP (www.gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

See Also:

GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

GPB Investors Have Won Monetary Awards in 10 of 11 Arbitration Cases This Past Year

About GWG L Bonds

An L bond is a financial product created by GWG Holdings, Inc. The L Bonds are speculative, high-risk, and illiquid alternative investment offerings.

Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.

GWG L Bonds were likely not suitable for investors with a low-to-moderate risk tolerance or investors who had liquidity needs.

On April 20, 2022, GWG filed for Chapter 11 bankruptcy. According to the bankruptcy filings, the SEC has been investigating the sales practices of brokerage firms related to GWG L Bonds. It has been recently reported that the SEC’s investigation began in May 2021. We believe that this regulatory investigation includes the sales practices of Emerson Equity and its regional broker-dealers, such as Dempsey Lord Smith.

Last month, the SEC’s investigation led to its first lawsuit as the regulator filed a lawsuit against Western International Securities, Inc., and several of its brokers in a federal court in California. The firm is accused of failing to perform due diligence regarding the inherent risks associated with GWG L Bonds and recommending these risky products to customers in situations where they were not in the best interest of the firm’s customers.

Brokerage firms like Western International Securities, Inc. and Dempsey Lord Smith are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Investors who purchased GWG L Bonds should contact New York Securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation to review their legal rights.

About GPB Capital Funds

GPB Capital is a New York-based alternative asset management firm founded in 2013. GPB Capital serves as the general partner for limited partnerships formed to acquire income-producing companies. GPB Capital had four flagship funds, which were sold as private placement offerings:

• GPB Holdings, LP / GPB Holdings Qualified, LP.
• GPB Automotive Portfolio, LP.
• GPB Holdings II, LP.
• GPB Waste Management, LP.

In February 2021, the SEC charged GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies with running a Ponzi-like scheme that raised roughly $1.8 billion from securities issued by GPB Capital. In addition, David Gentile, the owner and chief executive of GPB; Jeffry Schneider, the owner and CEO of Ascendant Capital LLC; and Jeffrey Lash, a former GPB managing partner, are all facing criminal and civil fraud charges. The SEC believes that as many as 17,000 retail investors nationwide have been defrauded.

GPB Capital raised capital from private retail investors through private placement offerings that were sold by approximately sixty broker-dealers and investment advisory firms across the country, including Dempsey Lord Smith. In total, the GPB funds have collectively raised over $1.8 million in capital from investors. While GPB Capital and financial advisors used promises of steady, 8% dividends from investment gains to lure investors, “a significant portion of GPB’s distributions were paid directly from investor funds,” according to numerous civil and criminal complaints. There are serious concerns that broker-dealers may have failed to conduct reasonable due diligence about GPB Capital and the GPB funds.

FINRA has stated that “reasonable diligence” means that the firm’s and/or broker’s due diligence “must provide the firm or associated person with an understanding of the potential risks and rewards of the recommended security or strategy.”

Brokerage firms may have failed to conduct reasonable diligence into GPB Capital and the GPB funds before selling the private placement offerings to their customers. The firms’ compliance departments likely ignored or missed many red flags.

For example, according to the SEC’s complaint, beginning in August 2015, GPB Automotive Portfolio LP began to use investor funds to make distributions to other investors. However, GPB Automotive Portfolio’s private placement memorandum stated that distributions would be made from the limited partnership’s operations. The private placement memorandum was updated in June 2016 to disclose that the limited partnership may use investor capital to make distributions, but it had “no present plans to do so,” despite already doing so. These statements were false and misleading. At the time the PPM was issued, GPB Automotive Portfolio had used over $2.5 million of investor capital to pay distributions.

The false statements by GPB Capital were also discoverable by brokerage firms who sold the private placement offering to retail investors for large up-front commissions, including Dempsey Lord Smith. For example, in 2016, GPB Automotive Portfolio’s financial reports revealed that the fund made $14.3 million in distributions to investors; however, it recorded only $5.4 million of income from operations. The significant gap between the amount in distributions paid out to investors and the entity’s operating income should have been a huge red flag to brokerage firms. Instead, the red flag was ignored, and GPB Automotive Portfolio was sold to retail investors by brokerage firms and investment advisory firms. This is just one example of how brokerage firms may have failed their due diligence obligations.

As a result of due diligence failures, or other sales practice violations, GPB investors may have legal claims against brokerage firms or investment advisory firms.

FINRA Letter of Acceptance, Waiver, and Consent No. 2019061213901

FINRA and Dempsey Lord Smith entered into FINRA Letter of Acceptance, Waiver, and Consent No. 2019061213901 (the “AWC”) on June 23, 2022, after FINRA alleged that between May 4, 2018, and June 29, 2018, Dempsey Lord negligently omitted to tell four investors in an offering related to GPB Capital that the issuer failed to timely make required filings with the SEC, including filing audited financial statements. FINRA also alleged that between September 1, 2015, and June 8, 2018, certain Dempsey Lord registered representatives made unsuitable recommendations of GPB Capital securities to four investors. By virtue of the foregoing, Dempsey Lord violated FINRA Rules 2111 and 2010.

Specifically, related to the allegations that Dempsey Lord Smith negligently failed to tell four investors material information concerning a GPB Capital Offering in 2018, FINRA alleged:

• From 2013 through 2018, GPB Capital launched several limited partnerships, each focused on acquiring controlling interests in certain private-sector companies.
• As relevant here, the GPB Capital limited partnerships included GPB Automotive Portfolio, LP (Automotive Portfolio), GPB Cold Storage, LP (Cold Storage), GPB NYC Development, LP (NYC Development), and GPB Waste Management (Waste Management).
• These GPB Capital limited partnerships raised capital by selling limited partnership interests to retail investors. GPB Capital sold the limited partnership interests through, among other channels, broker-dealers.
• The securities GPB Capital sold, including those issued by Automotive Portfolio and Holdings II, were not registered. Instead, the limited partnership interests were sold pursuant to Regulation D of the Securities Act of 1933.
• These four GPB Capital limited partnerships raised a combined amount of more than $1 billion from investors between July 2013 and August 2018.
• The GPB Capital offering documents stated that the limited partnership interests were all illiquid securities that were intended to be held by only “sophisticated investor[s]” who were “able to bear the economic and other risks of [an] investment in the [limited partnership interests] for an indefinite period of time.” The offering documents further stated that the GPB Capital limited partnership interests were “highly speculative investments which involve a high degree of risk of loss of the entire investment.” Such risks involved, among other things, GPB Capital’s lack of an operating history and significant expenses, including commissions GPB Capital typically paid to brokerage firms equal to 8% of the gross proceeds of each sale.
• Dempsey Lord first learned of GPB Capital in or around late 2013. After conducting due diligence on each offering, Dempsey Lord approved Automotive Portfolio for sale by the firm’s registered representatives in April 2015 and then approved Cold Storage in July 2015, NYC Development in April 2016, and Waste Management in August 2016.
• On July 10, 2017, GPB Capital filed a lawsuit in New York against one of its former operating partners who had allegedly failed to acquire certain automotive dealership interests (the New York Litigation). In connection with the New York Litigation, the former partner asserted various counterclaims against GPB Capital and alleged that GPB Capital had falsified financial statements to conceal that GPB Capital was defrauding its investors. GPB Capital denied the former partner’s allegations, and the litigation remains pending.
• On April 27, 2018, GPB Capital released what it characterized as important updates regarding the audited financial statements for certain of its limited partnerships, including Automotive Portfolio. The letters, which were sent to broker-dealers that sold GPB Capital-related investments, including Dempsey Lord Smith, stated that GPB Capital was in the process of registering certain classes of securities issued by certain of the limited partnerships, including Automotive Portfolio, with the SEC. As part of that process, Automotive Portfolio was required to file audited financial statements. The letters further stated that the delivery of Automotive Portfolio’s audited financial statements (which were due to be filed by April 30, 2018) would be delayed pending the completion of a forensic audit. Specifically, GPB Capital disclosed that it and its auditors “determined that it would be prudent to hire a third-party firm to complete a forensic audit in order to endeavor to put [the former partner’s] counterclaims and other allegations to rest.” The offering documents for Automotive Portfolio were not timely amended to disclose that the partnerships would be delayed in filing their audited financial statements with the SEC.
• Dempsey Lord learned of the delays and GPB Capital’s stated intention to complete a forensic audit. Between May 4, 2018, and June 29, 2018, Dempsey Lord sold four limited partnership interests in Automotive Portfolio without informing the customers that the issuer had not timely filed its audited financial statements with the SEC or the reasons for the delay. The delays in filing audited financial statements were material information that should have been disclosed. Dempsey Lord’s four sales of interests in Automotive Portfolio totaled $323,000, and the firm received a total of $25,840 in commissions from these sales.
• By negligently omitting material facts, Dempsey Lord violated FINRA Rule 2010.

Specifically, related to the allegations that Dempsey Lord Smith made four unsuitable sales of GPB Capital Securities:

• FINRA Rule 2111(a) requires that a member or an associated person must have a reasonable basis to believe that a recommended transaction is suitable for the customer.
• One of the three main obligations associated with this Rule is “customer-specific” suitability. The Supplementary Material in Rule 2111.05(b) states that “[t]he customer-specific obligation requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile, as delineated in Rule 2111(a).” A customer’s investment profile includes, among other things, the customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, and risk tolerance.
• Between September 1, 2015, and June 8, 2018, Dempsey Lord registered representatives recommended and sold GPB Capital securities to four customers that were unsuitable in light of the customers’ investment profiles. All of these sales were reviewed and approved by firm principals. The customers include:
• Customer A who made a $100,000 Cold Storage investment in September 2015. At the time of the investment, Customer A was 56 years old with an annual income and net worth that did not qualify her as an accredited investor as required to invest in Cold Storage. Customer A’s GPB investment also violated the firm’s internal concentration guidelines because the sale caused Customer A to exceed the 20% concentration threshold for combined holdings of alternative investments, including private placements. In addition, Customer A’s investment purpose was to save for retirement, and the customer ranked “speculation” as her least important investment objective (out of five options).
• Customer B who made a $50,000 NYC Development investment in June 2016. At the time of the investment, Customer B was 52 years old with an annual income and net worth that did not qualify her as an accredited investor, which was required to invest in NYC Development. Moreover, Customer B had limited investment knowledge with no prior limited partnership experience and an investment purpose to save for retirement.
• Customers Cl and C2 were a married couple who made a $50,000 Waste Management investment in April 2017. At the time of the investment, Customer Cl was over 76 years old and retired, and Customer C2 was over 66 years old and retired. While the customers’ net worth was just over the minimum amount to qualify as an accredited investor, because they already held two other GPB limited partnership interests, the sale of the $50,000 Waste Management investment caused them to exceed the firm’s 20% concentration threshold for combined holdings of alternative investments.
• Customer D who made a $100,000 Automotive Portfolio investment in June 2018. At the time of the investment, Customer D was over 60 years old and retired with a moderate risk tolerance and an annual income and net worth that did not qualify him as an accredited investor as required to invest in Automotive Portfolio.
• Dempsey Lord received a total of $24,000 in commissions from these four sales.
• By making unsuitable recommendations of GPB Capital securities to these four customers, Dempsey Lord violated FINRA Rules 2111 and 2010.

Dempsey Lord Smith, LLC (CRD No. 141238)

Dempsey Lord Smith, LLC has been an SEC-registered broker-dealer and FINRA member since 2007. The firm, which is based in Rome, Georgia, is a full-service introducing broker-dealer licensed to sell securities in 52 U.S. states and territories. Dempsey Lord Smith, LLC currently has a roster of approximately 100 registered brokers across the country and 28 branch offices.

Dempsey Lord Smith has six different regulatory disclosures, according to the firm’s public disclosure report with FINRA.

Financial institutions like Dempsey Lord Smith must supervise financial advisors and customer accounts properly. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

Dempsey Lord Smith, LLC, has used the following names to conduct business: 1SOURCE, WRS, WEST COBB INVESTMENT GROUP, TIM COUCH PC CPA, THE DIAMOND GROUP INC., SOUTHEAST ASSET MANAGEMENT, SHALIN FINANCIAL SERVICES, INC., SC RETIREMENT PLANNING, S M SHAW, ROGER’S RETIREMENT READINESS ALLIANCE, LLC, RETIREMENT STRATEGY CONNECTION, RETIREMENT SOLUTIONS INC., PREMIER TAX ADVISORS, PREFERRED FINANCIAL SOLUTIONS, LLC, PORTER INSURANCE AND FINANCIAL, PLUS POINT ADVISORS, PINPOINT FINANCIAL SERVICES, INC, PERRY GOSSETT INSURANCE, PARPARI ASSET MANAGEMENT INC., NEXSTONE FINANCIAL SOLUTIONS, INC, NATIC TAYLOR & CO LLC, MORGAN WEALTH MANAGEMENT, MICEL FINANCIAL, LLC, MARK MADDOX FINANCIAL, LYLES WEALTH MANAGEMENT, LEIGH FINANCIAL SERVICES, JLP INVESTMENTS INC, JESSE J GRIFFIN JR, ILLUMINATION FINANCIAL ADVISORS, HYDEPARK WEALTH ADVISORS, HOLLAND WEALTH MANAGEMENT, HN FINANCIAL GROUP, GRANDVIEW WEALTH MANAGEMENT, GIBSON RETIREMENT PLANNING, FRONT PAGE FINANCIAL ADVISORS, LLC, FOOTHILLS FINANCIAL STRATEGIES, FINANCIAL INTEGRITY GROUP, FALK WEALTH MANAGEMENT, EXCLUSIVE FINANCIAL STRATEGIES, DEMPSEY, LORD, SMITH, LLC, DEMPSEY LORD SMITH, LLC, DEANS CONSULTING, CRESCENT WEALTH MANAGEMENT, CRESCENT WEALTH ADVISORS, CORNERSTONE FINANCIAL, LLC, CORE CAPITAL MARKETS, LLC, COLABORATIVE INVESTMENT MANAGEMENT, CLAIR LORD JARRETT, CHARLES MURPHY INSURANCE, BROCK FINANCIAL SERVICES, INC., BREEN FINANCIAL, BLANTON FINANCIAL GROUP, BELMONT CAPTIAL ADVISORS, BAXTER INSURANCE AGENCY, AEGEUS FINANCIAL SOLUTIONS, INC., AAPT, LLC

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in GWG L Bonds or GPB Capital Funds through Dempsey Lord Smith, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

On June 23, 2022, the Financial Industry Regulatory Authority (FINRA) ordered National Securities Corporation (“NSC”) to pay nearly $9 million in monetary fines and restitution for violating various SEC, NASD, and FINRA rules, including negligently omitting material facts to retail investors connected with offerings related to GPB Capital Holdings, LLC (“GPB Capital”). NSC consented to the sanctions after FINRA alleged that between April 2018 and July 2018, NSC negligently omitted to tell investors in two offerings related to GPB Capital that the issuers failed to timely make required filings with the Securities and Exchange Commission (“SEC”), including audited financial statements.

Additionally, upon information and belief, National Securities Corporation was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022. Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

Investors who purchased GWG L Bonds or any GPB Capital Funds through National Securities Corporation or any other broker-dealer are encouraged to contact Iorio Altamirano LLP (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

See Also:

GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

GPB Investors Have Won Monetary Awards in 10 of 11 Arbitration Cases This Past Year

About GWG L Bonds

An L bond is a financial product created by GWG Holdings, Inc. The L Bonds are speculative, high-risk, and illiquid alternative investment offerings.

Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.

GWG L Bonds were likely not suitable for investors with a low-to-moderate risk tolerance or investors who had liquidity needs.

On April 20, 2022, GWG filed for Chapter 11 bankruptcy. According to the bankruptcy filings, the SEC has been investigating the sales practices of brokerage firms related to GWG L Bonds. It has been recently reported that the SEC’s investigation began in May 2021. We believe that this regulatory investigation includes the sales practices of Emerson Equity and its regional broker-dealers, such as National Securities Corporation.

Last month, the SEC’s investigation led to its first lawsuit as the regulator filed a lawsuit against Western International Securities, Inc., and several of its brokers in a federal court in California. The firm is accused of failing to perform due diligence regarding the inherent risks associated with GWG L Bonds and recommending these risky products to customers in situations where they were not in the best interest of the firm’s customers.

Brokerage firms like Western International Securities, Inc. and National Securities Corporation are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Investors who purchased GWG L Bonds should contact New York Securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation to review their legal rights.

About GPB Capital Funds

GPB Capital is a New York-based alternative asset management firm founded in 2013. GPB Capital serves as the general partner for limited partnerships formed to acquire income-producing companies. GPB Capital had four flagship funds, which were sold as private placement offerings:

• GPB Holdings, LP / GPB Holdings Qualified, LP.
• GPB Automotive Portfolio, LP.
• GPB Holdings II, LP.
• GPB Waste Management, LP.

In February 2021, the SEC charged GPB Capital, Ascendant Capital, and Ascendant Alternative Strategies with running a Ponzi-like scheme that raised roughly $1.8 billion from securities issued by GPB Capital. In addition, David Gentile, the owner and chief executive of GPB; Jeffry Schneider, the owner and CEO of Ascendant Capital LLC; and Jeffrey Lash, a former GPB managing partner, are all facing criminal and civil fraud charges. The SEC believes that as many as 17,000 retail investors nationwide have been defrauded.

GPB Capital raised capital from private retail investors through private placement offerings that were sold by approximately sixty broker-dealers and investment advisory firms across the country, including National Securities Corporation. In total, the GPB funds have collectively raised over $1.8 million in capital from investors. While GPB Capital and financial advisors used promises of steady, 8% dividends from investment gains to lure investors, “a significant portion of GPB’s distributions were paid directly from investor funds,” according to numerous civil and criminal complaints. There are serious concerns that broker-dealers may have failed to conduct reasonable due diligence about GPB Capital and the GPB funds.

FINRA has stated that “reasonable diligence” means that the firm’s and/or broker’s due diligence “must provide the firm or associated person with an understanding of the potential risks and rewards of the recommended security or strategy.”

Brokerage firms may have failed to conduct reasonable diligence into GPB Capital and the GPB funds before selling the private placement offerings to their customers. The firms’ compliance departments likely ignored or missed many red flags.

For example, according to the SEC’s complaint, beginning in August 2015, GPB Automotive Portfolio LP began to use investor funds to make distributions to other investors. However, GPB Automotive Portfolio’s private placement memorandum stated that distributions would be made from the limited partnership’s operations. The private placement memorandum was updated in June 2016 to disclose that the limited partnership may use investor capital to make distributions, but it had “no present plans to do so,” despite already doing so. These statements were false and misleading. At the time the PPM was issued, GPB Automotive Portfolio had used over $2.5 million of investor capital to pay distributions.

The false statements by GPB Capital were also discoverable by brokerage firms who sold the private placement offering to retail investors for large up-front commissions, including National Securities Corporation. For example, in 2016, GPB Automotive Portfolio’s financial reports revealed that the fund made $14.3 million in distributions to investors; however, it recorded only $5.4 million of income from operations. The significant gap between the amount in distributions paid out to investors and the entity’s operating income should have been a huge red flag to brokerage firms. Instead, the red flag was ignored, and GPB Automotive Portfolio was sold to retail investors by brokerage firms and investment advisory firms. This is just one example of how brokerage firms may have failed their due diligence obligations.

As a result of due diligence failures, or other sales practice violations, GPB investors may have legal claims against brokerage firms or investment advisory firms.

FINRA Letter of Acceptance, Waiver, and Consent No. 2019061652404

FINRA and National Securities Corporation entered into an AWC on June 23, 2022, after FINRA alleged that National Securities Corporation violated various SEC, NASD, and FINRA Rules. As part of the allegations, FINRA alleged between April 2018 and July 2018, NSC negligently omitted to tell investors in two offerings related to GPB Capital that the issuers failed to timely make required filings with the SEC, including filing audited financial statements. By virtue of the foregoing, NSC violated FINRA Rule 2010. Specifically, FINRA alleged:

• From 2013 through 2018, GPB Capital launched several limited partnerships, each focused on acquiring controlling interests in certain private-sector companies.
• As relevant here, the GPB Capital limited partnerships included GPB Automotive Portfolio, LP (Automotive Portfolio), which was formed in 2013 to acquire and operate automotive dealerships, and GPB Holdings II, LP (Holdings II), which was formed in 2015 primarily to acquire and operate companies in the automotive retail and managed IT sectors.
• These GPB Capital limited partnerships raised capital by selling limited partnership interests to retail investors. GPB Capital sold the limited partnership interests through, among other channels, broker-dealers.
• The securities GPB Capital sold, including those issued by Automotive Portfolio and Holdings II, were not registered. Instead, the limited partnership interests were sold pursuant to Regulation D of the Securities Act of 1933.
• As a condition of the offerings, only accredited investors were permitted to purchase the GPB Capital limited partnership interests.
• After conducting due diligence on each offering, NSC approved Holdings II for sale by the firm’s registered representatives in December 2015 and then approved Automotive Portfolio in May 2016.
• Making a negligent misrepresentation or omission of a material fact to customers violates FINRA Rule 2010, as it is inconsistent with just and equitable principles of trade.
• On July 10, 2017, GPB Capital filed a lawsuit in New York against one of its former operating partners who had allegedly failed to acquire certain automotive dealership interests (the New York Litigation). In connection with the New York Litigation, the former partner asserted various counterclaims against GPB Capital and alleged that GPB Capital had falsified financial statements to conceal that GPB Capital was defrauding its investors. GPB Capital denied the former partner’s allegations, and the litigation remains pending.
• On April 27, 2018, GPB Capital released what it characterized as important updates regarding the audited financial statements for certain of its limited partnerships, including Automotive Portfolio and Holdings II. The letters, which were sent to broker-dealers that sold GPB Capital-related investments, including NSC, stated that GPB Capital was in the process of registering certain classes of securities issued by certain of the limited partnerships, including Automotive Portfolio and Holdings II, with the SEC. As part of that process, Automotive Portfolio and Holdings II were required to file audited financial statements. The letters further stated that the delivery of Automotive Portfolio’s and Holdings II’s audited financial statements (which were due to be filed by April 30, 2018) would be delayed pending the completion of a forensic audit. Specifically, GPB Capital disclosed that it and its auditors “determined that it would be prudent to hire a third-party firm to complete a forensic audit in order to endeavor to put [the former partner’s] counterclaims and other allegations to rest.” The offering documents for Automotive Portfolio and Holdings II were not timely amended to disclose that the partnerships would be delayed in filing their audited financial statements with the SEC.
• While NSC received the letters from GPB Capital notifying it of the delays and GPB Capital’s stated intention to complete a forensic audit, it sold 115 limited partnership interests in Automotive Portfolio and eight limited partnership interests in Holdings II after that announcement. The principal value of those sales, which occurred between April 30, 2018, and July 11, 2018, totaled approximately $8.7 million. NSC received a total of $701,480 in commissions from the sales.
• In connection with these sales, however, NSC representatives did not inform the customers that Automotive Portfolio and Holdings II had not timely filed their audited financial statements with the SEC or the reasons for the delay. The delay in filing audited financial statements was material information that should have been disclosed.
• Therefore, by negligently omitting material facts, NSC violated FINRA Rule 2010.

National Securities Corporation (CRD No. 7569)

National Securities Corporation (NSC) has been an SEC-registered broker-dealer and FINRA member since 1947. The firm, which is based in Boca Raton, Florida, is licensed to sell securities in 53 U.S. states and territories. NSC currently has a roster of approximately 574 registered brokers across the country and 119 branch offices.

The broker-dealer has also used the names Nat’l Securities Corp, Washington National Securities Corporation, NTL Insurance Agency, NSC Insurance Agency, National Securities of Washington, and National Securities Corp of Washington State to conduct business.

NSC has 82 different regulatory disclosures, according to the firm’s public disclosure report with FINRA.

In April 2022, NSC was censured, fined $300,000, and ordered to pay $363,447.67 in disgorgement (AWC No. 2019064508801). NSC contravened Section 17(a)(3) of the Securities Act of 1933 and violated FINRA Rules 2010 and 3110 by deceiving investors in connection with its sales of a “pre-IPO” private placement offering, failing to reasonably enforce its written supervisory procedures (WSPs), and failing to reasonably supervise the head of its “pre-IPO” offering business.

In May 2011, NSC was censured and ordered to pay $175,000 in partial restitution to investors in a private offering (AWC No. 2009019068201). NSC violated NASD Rules 2310, 3010, and 2110 and FINRA Rule 2010 when it failed to conduct reasonable due diligence and have a reasonable basis for recommending two private offerings.

Financial institutions like National Securities Corporation must supervise financial advisors and customer accounts properly. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in GWG L Bonds or GPB Capital Funds through National Securities Corporation, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

The CFP Board is a non-profit organization that serves at public by administering the Certified Financial Planner certification program. Accordingly, as a result of the suspension, Mr. Egan cannot use the “CFP” designation.

Mr. Egan was one of five brokers that were charged by the SEC on June 15, 2022, for failing to comply with the SEC’s Regulation Best Interest (“Reg BI”) care and disclosure obligations when recommending and selling GWG L Bonds to retail investors and retirees.

Specifically, the defendants were of accused failing to perform due diligence regarding the inherent risks associated with L Bonds. The complaint also alleges that the named brokers misunderstood important issues regarding GWG Holdings, Inc. and the GWG L Bonds, including that GWG significantly changed its business model beginning in 2018 and that GWG L Bonds were not directly collateralized by life insurance policies. As a result, the brokers recommended GWG L Bonds to retail customers without a reasonable basis to believe that the investments were in the customers’ best interest. In addition to Mr. Egan, the other brokers named in the complaint were Steven Graham, Andy Gitipityapon, Thomas Swan, and Nancy Cole.

Iorio Altamirano LLP (www.gwglawyer.com), a law firm that represents GWG L Bond investors in filing individual claims to recover investment losses, encourages all investors who purchased L Bonds through any brokerage firm or financial advisor to contact the law firm for a free consultation to evaluate their options. Collectively, Iorio Altamirano LLP has filed claims seeking to recover over $3 million in losses and damages from brokerage firms for the improper sale of GWG L Bonds.

About GWG L Bonds

An L bond is a financial product created by GWG Holdings, Inc. (GWGH). The L Bonds are speculative, high-risk, illiquid, and unrated alternative investment offerings.

Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022.

Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

Brokerage firms like Western International Securities, Inc. and brokers like Mr. Egan are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Patrick Michael Egan (CRD No. 2973478)

Patrick Egan has been a registered broker with Western International Securities, Inc. in Pasadena, CA, and Glendora, CA, since January 22, 1998. Since July 30, 2007, he has also been an SEC-registered investment advisor with the firm. Mr. Egan has 24 years of experience in the securities industry and has been associated with two different firms.

According to the SEC’s complaint against Western International and Mr. Egan (the “Complaint”), Mr. Egan recommended and sold approximately $184,500 worth of GWG L Bonds to retail investors between July 2020 and April 2021, which generated at least $5,397 in commissions. The Complaint alleges that Mr. Egan failed to comply with Regulation Best Interest’s Care Obligation and constitutes violations of Regulation Best Interest’s General Obligation. Accordingly, according to the Complaint, Mr. Egan violated Rule 15l-1(a)(1) of the Exchange Act, 17 CFR § 240.15l-1(a)(1).

Specifically, with respect to Mr. Egan, the Complaint made the following allegations:

• Mr. Egan took a training course on GWG L Bonds prior to the issuance of L Bonds in June 2020, which may have been the basis for his misunderstanding of important issues regarding GWG and the GWG L Bonds that were disclosed by GWG in the 2020 Prospectus and subsequent public filings.
• Mr. Egan erroneously believed that GWG’s transactions with Beneficient were not significant.
• Mr. Egan acknowledged that the 2020 Prospectus described the GWG L Bonds as high risk but disregarded that disclosure.
• Mr. Egan did not understand the nature of the collateral for GWG L Bonds and failed to appreciate that the life insurance policies themselves did not collateralize the GWG L Bonds.
• Mr. Egan acknowledged that he should have reviewed Beneficient’s financial statements and admitted he did not do so but rather erroneously assumed that Beneficient was profitable.

The Complaint details one of Mr. Egan’s GWG L Bond recommendations. In or around August 2020, Mr. Egan recommended that a 75-year-old retiree with a moderate-conservative risk profile invest $20,000 into a 3-year GWG L Bond. The customer had an annual income of $50,000, a net worth of $250,000, and a liquid net worth of $250,000. He did not include speculation as an investment objective and had limited knowledge of investments in general and of bonds in particular. The GWG L Bonds, which were held in the customer’s individual account, represented 8% of both his liquid and total net worth. In the “rationale” section of the firm’s disclosure forms, Mr. Egan wrote in full: “Client had extra cash in the bank and wanted to earn more interest than can be done in his bank. Client will also have a large cash balance in his bank account in addition to the $20,000 at GWG.” According to the Complaint, besides the rationale section of the Client Disclosure Form, Mr. Egan did not document anywhere his bases for believing that the $20,000 GWG L Bond purchase was in the customer’s best interest. In addition, Mr. Egan did not document why he chose to recommend the GWG L Bonds to the customer as opposed to many other investments that offered higher interest rates than a bank account. The SEC contends that Mr. Egan’s bases for believing that the $20,000 GWG L Bond investment was in the customer’s best interest were unreasonable and not supported by the facts. Accordingly, the Complaint alleges that Mr. Egan did not exercise reasonable diligence, care, and skill to have a reasonable basis to believe his recommendation of the GWG L Bonds was in the customer’s best interest. The Complaint also alleges that Mr. Egan’s supervisor and Western International’s compliance department failed to raise questions or concerns regarding the customer’s bond investment.

Investors who purchased GWG L Bonds through Western International Securities or any other broker-dealer are encouraged to contact Iorio Altamirano LLP (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

Iorio Altamirano LLP has filed claims seeking to recover over $3 million in losses and damages from brokerage firms across the country for the improper sale of GWG L Bonds.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

See Also:

GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in L Bonds offered by GWG Holdings through Aegis Capital Corp., contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.

GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022.

Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

According to the bankruptcy filings, the United States Securities and Exchange Commission (SEC) has been investigating the sales practices of brokerage firms related to GWG L Bonds. It has been recently reported that the SEC’s investigation began in May 2021. We believe that this regulatory investigation includes the sales practices of Emerson Equity and its regional broker-dealers, such as Great Point Capital LLC.

Last week, the SEC’s investigation led to its first lawsuit as the regulator filed a lawsuit against Western International Securities, Inc., and several of its brokers in a federal court in California. The firm is accused of failing to perform due diligence regarding the inherent risks associated with GWG L Bonds and recommending these risky products to customers in situations where they were not in the best interest of the firm’s customers.

Brokerage firms like Western International Securities, Inc. and Great Point Capital LLC are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.

Investors who purchased GWG L Bonds through Great Point Capital LLC or any other broker-dealer are encouraged to contact Iorio Altamirano LLP (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.

Iorio Altamirano LLP has filed claims seeking to recover over $2.5 million in losses and damages from brokerage firms across the country for the improper sale of GWG L Bonds.

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.

About GWG L Bonds

An L bond is a financial product created by GWG Holdings, Inc. The L Bonds are speculative, high-risk, and illiquid alternative investment offerings.

Initially, GWG Holdings pooled money from bond investors to purchase life insurance policies on the secondary market, paid the policy premiums, and then collected the death benefit when the insured individual passed away. However, beginning in 2018, GWG Holdings used the investor capital to invest in a new business model, exposing the company to riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.

GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.

GWG L Bonds were likely not suitable for investors with a low-to-moderate risk tolerance or investors who had liquidity needs.

Investors who purchased GWG L Bonds should contact New York Securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation to review their legal rights.

Great Point Capital LLC (CRD No. 114203)

Great Point Capital LLC is an SEC-registered broker-dealer and investment advisor based in Chicago, IL. The firm, licensed to sell securities in 50 U.S. states and territories, currently has a roster of approximately 202 registered brokers and investment advisors across the country. Great Point Capital LLC has been a FINRA member since 2001. The firm provides, among other things, services in connection with wealth management, investment banking, and capital market services.

The broker-dealer has also used the names Maverick Brokerage LLC and Great Point Trading LLC to conduct business.

According to the Great Point Capital’s public disclosure report with FINRA, the firm has ten different regulatory disclosures which have resulted in censures, monetary fines, and restitution.

Financial institutions like Great Point Capital must supervise financial advisors and customer accounts properly. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.

See Also:

GWG L Bond Investor Recovers Losses After Filing a FINRA Arbitration Claim

Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

GWG L Bond Investors Seek Recourse After GWG Holdings, Inc. Files for Chapter 11 Bankruptcy

About Iorio Altamirano LLP

Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.

We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.

If you have invested in L Bonds offered by GWG Holdings through Great Point Capital LLC, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (646) 330-4624.