If you invested in this property, you were likely sold on the promise of a “stable,” “income-producing,” and “tax-advantaged” replacement property. However, recent data reveals a different reality.

Iorio Law PLLC is actively investigating One on 4th DST as part of our broader investigation into Versity/Crew Enterprises DSTs. Investor outcomes depend heavily on truthful disclosures and broker-dealer due diligence. When those fail, investors have the right to seek financial recovery.

What’s New: Q4 2025 Results Show Meaningful Losses

The Sponsor’s Q4 2025 investor update paints a concerning picture of the property’s financial health. For the fourth quarter of 2025:

• One on 4th LeaseCo, LLC reported a net loss of ($292,008).
• The Trust reported a net loss of ($1,673,262).

These losses are significant. DST investors typically rely on the Trust’s net cash flow (or reserve usage) for regular distributions and principal preservation. When a Trust runs deep quarterly losses, investors face heightened risks of continued distribution suspensions, further asset deterioration, and potential forced restructuring.

“Strong Occupancy” Does Not Guarantee Investor Safety

The Q4 2025 update notes that the property ended the quarter at 98.9% occupancy and describes the asset as “stabilized.” However, the update also acknowledges that operating performance remains heavily pressured by elevated costs—particularly property taxes, insurance, and utilities—which remain consistently above initial underwriting assumptions.

The bottom line: High occupancy does not equal sustainable distributable cash flow. For DST investors, success requires sufficient cash flow after debt service, taxes, insurance, property management costs, and other hidden charges.

Why the DST Structure Matters: Master Leases and the Fee Stack

One on 4th DST utilizes a master lease structure. The Trust leases the property to an affiliate (One on 4th LeaseCo, LLC), and another affiliate entity serves as the property manager. Affiliate-driven structures can create inherent conflicts of interest and severely reduce transparency, leaving investors dependent on sponsor-controlled reporting across multiple related entities.

Furthermore, this offering carried a massive upfront selling-cost and fee structure. The Private Placement Memorandum (PPM) notes that WealthForge Securities, LLC served as the exclusive managing broker-dealer. Selling commissions and expenses were capped at a staggering 9.33% (including selling commissions, dealer management fees, broker-dealer allowances, wholesaling fees, and offering expenses).

High-commission alternative investments often create dangerous incentives for:

• Aggressive sales practices.
• Incomplete discussions regarding risk and liquidity.
• “Rubber-stamp” due diligence by broker-dealers who ignore sponsor red flags.

Broker-Dealer Liability: Investigating One on 4th DST Sales

Over the past several years, One on 4th DST and other Versity/Crew-sponsored investments have reportedly experienced loan defaults, declining occupancy, significant accounts payable, suspended distributions, and a distinct lack of investor communication.

When transparency disappears, we ask the critical questions: Where did the offering proceeds actually go? Were reserve accounts properly maintained? Were related-party payments fully disclosed?

The Crux of the Claims: A Missed 2020 Fraud Lawsuit

At the heart of the claims against the selling broker-dealers is a glaring failure of due diligence, disclosure, and supervision.

Specifically, our investigation focuses on the failure of brokerage firms to detect and disclose that the principals of Versity/Crew, Blake Wettengel and Tanya Muro, were named as defendants in a lawsuit filed in November 2020. This lawsuit contained severe allegations that the principals defrauded investors by misappropriating syndicated funds for their own personal benefit.

For a broker-dealer, uncovering a prior fraud and misappropriation lawsuit against a sponsor’s principals is “Due Diligence 101.” Recommending a high-risk, illiquid DST like One on 4th without disclosing this massive red flag to retail investors represents a severe potential breach of regulatory obligations.

Reg BI, Suitability, and Failure to Supervise

Through FINRA arbitration, One on 4th DST investors may have strong claims against the brokerage firms that sold them these investments. Potential claims include:

• Failure to conduct reasonable due diligence into sponsor controls, related-party transactions, and prior litigation involving the sponsor’s principals.
• Misrepresentations and omissions regarding the safety, distribution risks, and the true track record of the sponsor.
• Regulation Best Interest (Reg BI) and Suitability violations, including over-concentrating investor portfolios in highly illiquid alternative investments.
• Failure to supervise brokers who aggressively marketed DSTs as “safe” or “stable” while downplaying or entirely omitting known structural risks and legal red flags.

“Bridge Equity” and Structural Risks

Additionally, the PPM describes the use of “bridge equity” to close the acquisition before sufficient DST interests were actually sold. It contains warnings that, in certain default scenarios, proceeds from the sale of DST interests could be demanded to satisfy obligations not directly tied to the property. Many retail investors were never meaningfully warned about this proceeds-flow risk.

Practical Next Steps for One on 4th DST Investors

If you invested in One on 4th DST and are currently dealing with suspended distributions or limited communications, it is time to protect your legal rights.

1. Gather Your Documents: Locate your subscription paperwork, the PPM, investor reports, email correspondence with your advisor, and account statements.
2. Identify the Seller: Note the specific advisor who recommended the investment and the broker-dealer firm they were registered with at the time of the sale.
3. Evaluate FINRA Arbitration Options: In many DST fraud and negligence cases, financial recovery is pursued directly against the selling broker-dealer. Brokerage firms carry meaningful insurance and represent a collectible source of recovery.

Contact Iorio Law PLLC Today

Iorio Law PLLC is actively investigating financial losses connected to Versity/Crew-sponsored DSTs, including One on 4th DST. If you are concerned about your suspended distributions, the lack of transparency, or the safety of your principal investment, we can evaluate whether a FINRA arbitration claim is appropriate for you.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: New York, NY | Representing DST Investors Nationwide
🖊️ Free Case Review: Contact Form

If you are searching for information on “Versity Income Property Notes,” “VIP Notes,” “Versity Invest, LLC,” “Versity II,” or “Crew Enterprises” because your monthly interest payments unexpectedly stopped in April 2025, you are not alone.

Iorio Law PLLC dozens of represents investors nationwide in FINRA arbitration claims against broker-dealers that sold high-risk private placements and alternative investments. We are actively investigating the sale of VIP Notes through multiple broker-dealers, including:

• WealthForge Securities, LLC (Managing Broker-Dealer / Dealer-Manager)
• Great Point Capital, LLC
• Capulent LLC
• A.G.P. / Alliance Global Partners

If your VIP Notes were recommended and sold through any of these firms, or another FINRA member, this guide explains what VIP Notes are, the red flags surrounding the issuer, and why your broker-dealer may be legally responsible for your investment losses.

What are VIP Notes?

VIP Notes are a Regulation D (Rule 506(b)) private placement consisting of 24-month unsecured notes. The offering documents described the VIP Notes as an “income” investment designed to pay monthly interest. However, the central risk of this investment is extreme issuer credit risk.

When payments stop, investors usually learn the hard truth about private placement debt: a “note” of this type behaves less like a traditional secure bond and more like a highly speculative, unsecured loan to a private business.

The Key Legal Issue: Broker-Dealer Liability

Many investors mistakenly assume that if an issuer defaults, the invested capital is simply gone. In a FINRA arbitration claim, the legal focus shifts to whether the broker-dealer and the individual broker complied with their strict regulatory duties at the time of the recommendation and sale.

Broker-dealers are required to adhere to the SEC’s Regulation Best Interest (Reg BI) and state and federal securities laws. To satisfy these obligations, firms must conduct:

• Reasonable Investigation: Broker-dealers must perform independent due diligence on the security and the issuer, which is especially critical for Regulation D private placements.
• Accurately Disclose Material Information: Broker-dealers and brokers must accurately disclose all material information about the security and  the issuer.
• Care Obligation: Brokers must exercise reasonable diligence, care, and skill to ensure the recommendation is in the retail customer’s best interest.
• Fair and Balanced Disclosure: Firms must disclose all material risks, red flags, and conflicts of interest.
• Supervision: Brokerages must implement and maintain supervisory systems designed to prevent unsuitable or misleading sales practices.

FINRA has long warned that complex, illiquid, “non-conventional” products require heightened diligence, supervision, and training. Regulatory Notice 23-08 reiterates that when recommending privately offered securities, firms should reasonably investigate the issuer and management, business prospects, assets, claims being made, and the use of proceeds.

Missed Red Flags: Why Diligence Mattered for VIP Notes

Because VIP Notes are unsecured issuer debt, a broker-dealer’s due diligence cannot stop at marketing language or a glossy pitch deck. According to recent arbitration filings, multiple lawsuits and arbitrations publicly alleged that Versity’s principals diverted and misappropriated syndicated investor funds for personal benefit well before many VIP Notes were sold.

A reasonably diligent broker-dealer evaluating this offering should have investigated:

• Whether the principals of the issuer were previously alleged to have defrauded investors.
• Whether the issuer had the actual financial capacity and liquidity to pay monthly interest and return principal at maturity.
• Whether the stated “repayment sources” (such as syndication and disposition revenue) were reliable.
• Whether offering proceeds were adequately controlled and safeguarded from diversion.
• Whether the serious public allegations of fraud and fund misappropriation against the issuer’s principals disqualified the product from being recommended to retail investors.

If your broker recommended these Notes as “safe” income while minimizing material risks—or failing to disclose the severe litigation history of the issuer’s principals which included allegations of defrauding investors—that failure can support claims for Reg BI violations, negligent misrepresentation, unsuitability, and failure to supervise.

The Role of the Broker-Dealer in VIP Notes Sales

Investors searching for recovery options often look up the specific broker-dealer that sold them the investment. Every firm involved had a duty to ensure recommendations were made only after meaningful diligence.

WealthForge Securities, LLC (Dealer-Manager)

When a firm serves as a dealer-manager (or “managing broker-dealer”) for a private placement, its gatekeeping role is central. WealthForge received significant compensation for this offering, including a 6% selling commission, a 0.65% dealer management fee, and a 1% broker-dealer allowance specifically tied to its due diligence review. This role typically involves product approval, structuring, and setting the supervisory systems governing how the product can be sold.

Selling Broker-Dealers (Great Point Capital, Capulent, A.G.P.)

Even if a firm was not the dealer-manager, it must satisfy the exact same core obligations when recommending and selling a private placement to a retail customer. They must independently understand the product, conduct a reasonable investigation, evaluate suitability, disclose conflicts, and supervise their representatives’ communications.

Common FINRA Arbitration Claims for VIP Notes Investors

While every case is fact-specific, VIP Notes disputes commonly include the following claims:

• Reg BI (Care Obligation) Violations: The recommendation was not in the investor’s best interest, and the firm performed inadequate diligence on the issuer’s debt risk.
• Unsuitability and Concentration: An illiquid, high-risk private placement was inappropriately sold to conservative or retirement-focused investors seeking capital preservation.
• Misrepresentation and Omission: The broker minimized default risk, liquidity limits, the unsecured status of the notes, and the severe litigation history of the issuer’s management.
• Failure to Supervise: The brokerage firm exhibited inadequate product approval, training, and oversight for private placement sales.

Red Flags Checklist: Signs Your Broker May Be Liable

You may have a strong case for FINRA arbitration if any of the following apply to your situation:

• You were told VIP Notes were “safe,” “stable,” “bond-like,” or a conservative income product.
• You were not clearly informed that the Notes were unsecured and highly illiquid.
• You were assured your principal would be returned at maturity without a serious discussion regarding default risk.
• VIP Notes made up a disproportionately large percentage of your investable assets or retirement funds.
• The broker downplayed or completely failed to disclose material lawsuits and concerns regarding the issuer’s management and financial condition.

Act Quickly to Protect Your Rights

FINRA generally applies a six-year eligibility rule measured from the occurrence or event giving rise to the claim, and broker-dealers may also assert various state statutes of limitation. With payments having stopped in April 2025, delaying action can weaken your evidentiary position and leverage.

If you own VIP Notes, immediately collect your account statements showing the purchase, your subscription agreement, the PPM, any pitch decks, and all written communications with your broker.

How Iorio Law PLLC Can Help VIP Notes Investors

Iorio Law PLLC represents investors nationwide in FINRA arbitration claims involving illiquid alternative investments, including Versity and Crew Enterprises-related offerings.

If your VIP Notes were sold through WealthForge Securities, Great Point Capital, Capulent, or A.G.P. / Alliance Global Partners, we can evaluate whether your broker-dealer complied with its due diligence, disclosure, and best-interest obligations—and pursue recovery through FINRA arbitration where appropriate.

For more information on our related investigations, please visit our Delaware Statutory Trusts (DSTs) Investigation Page.

Next Step: Contact us today. Send us your trade confirmation or account statement showing the VIP Notes purchase, along with any emails or pitch materials from your broker, for a comprehensive case evaluation.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: New York, NY | Representing DST Investors Nationwide
🖊️ Free Case Review: Contact Form

The Financial Industry Regulatory Authority (FINRA) has suspended former Merrill Lynch and Oppenheimer broker Zachary Ellis Taylor (CRD #6074776) for nine months in all capacities after finding that he willfully violated federal securities laws and FINRA rules.

According to a FINRA settlement order (No. 2022075083801), between August 2020 and June 2023, while registered with Oppenheimer & Co. Inc., Taylor recommended that at least three senior customers with balanced allocation objectives and moderate risk tolerances invest in speculative options strategies. Specifically, he recommended that these investors sell large volumes of higher-risk put options contracts in high-volatility technology stocks.

When those put options were assigned, the customers suffered significant losses. FINRA found that Taylor’s recommendations were:

• Unsuitable for his customers given their investment profiles.
• Not in the customers’ best interest under Regulation Best Interest (Reg BI), which has been in effect since June 30, 2020.
• In violation of FINRA Rule 2360(b)(19)(A) (options conduct) and FINRA Rule 2010 (standards of commercial honor).

Importantly, FINRA noted that Taylor’s violations were willful under Section 15(l)(a)(1) of the Securities Exchange Act of 1934. Due to his demonstrated inability to pay, FINRA did not impose a monetary fine, but his suspension is effective for nine months.

👉 Read the full FINRA settlement here: FINRA AWC – Zachary Taylor

Termination from Oppenheimer

On June 2, 2023, Oppenheimer discharged Taylor, citing that he “was unable to provide sufficient documentary evidence to support his contention that he had authority for all trades in a client’s account.” This disclosure raises serious concerns regarding unauthorized trading, which can expose investors to losses without their consent.

History of Customer Complaints

Taylor’s FINRA BrokerCheck record reveals a troubling history. Since April 2022, he has been the subject of four customer disputes. According to BrokerCheck, these complaints alleged misconduct related to unsuitable recommendations and improper options trading strategies.

👉 Review his BrokerCheck record here: FINRA BrokerCheck – Zachary Taylor

A broker with multiple customer disputes and a regulatory suspension is a major red flag. FINRA itself advises investors to carefully review BrokerCheck disclosures before working with a financial professional.

Violations of Suitability and Regulation Best Interest

The misconduct described in FINRA’s order involves classic suitability and Reg BI violations.

• Under FINRA’s suitability standard, brokers must recommend investments that fit the customer’s objectives, financial situation, and risk tolerance.
• Under Reg BI, brokers must go a step further and ensure that all recommendations are in the customer’s best interest, not driven by the broker’s potential compensation.

Recommending that elderly or moderate-risk investors sell risky put options in volatile technology stocks violates both of these standards. Such trades expose customers to potentially unlimited downside risk and are wholly inconsistent with conservative investment objectives.

What This Means for Affected Investors

If you invested with Zachary Taylor at Oppenheimer or Merrill Lynch, and you suffered losses in speculative options strategies or trades you did not authorize, you may have legal claims.

Brokerage firms like Oppenheimer and Merrill Lynch are obligated to supervise their brokers and ensure that recommendations comply with suitability and Reg BI obligations. When they fail, both the broker and the firm can be held liable in FINRA arbitration, the forum where most investor claims are resolved.

Iorio Law PLLC: Helping Investors Recover Losses

At Iorio Law PLLC, we exclusively represent investors—not brokers or firms—in claims involving securities fraud, unsuitable investments, and financial advisor misconduct. Our founder, August M. Iorio, has recovered nearly $100 million for investors nationwide, including landmark victories such as the first FINRA arbitration award against Robinhood.

We regularly handle cases involving:

• Unsuitable investment recommendations
• Unauthorized trading
• Options strategy losses
• Failure to supervise
• Breach of fiduciary duty

We work on a contingency-fee basis—you pay nothing unless we recover money for you.

Call to Action: Protect Your Rights

If you or a loved one suffered losses in accounts handled by Zachary Taylor at Merrill Lynch or Oppenheimer, contact Iorio Law PLLC today. Time limits apply to FINRA arbitration claims, so it is important to act quickly.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: One World Trade Center, 85th Floor, New York, NY 10007
🖊️ Free Case Review: Contact Form

Free & confidential case evaluation. No recovery, no fee.

According to a FINRA Letter of Acceptance, Waiver, and Consent (AWC), between January 1, 2018, and December 30, 2021, JPMS’s supervisory system, including its written supervisory procedures (WSPs), was not reasonably designed to ensure compliance with the delivery requirements for preliminary IPO prospectuses to the firm’s institutional customers.

Background on IPO Prospectus Requirements

Under federal securities laws and FINRA rules, firms participating in IPOs must deliver preliminary prospectuses to certain customers before sales are confirmed. The requirement ensures that investors—particularly institutional clients receiving allocations—have access to essential information about the offering before making investment decisions.

Supervisory systems and written supervisory procedures are expected to be sufficiently robust to monitor and document compliance with these requirements. When firms fail to maintain effective procedures, regulators view the lapses as weakening investor protections and undermining transparency in the new issue market.

Findings Against J.P. Morgan Securities

FINRA’s investigation determined that JPMS’s supervisory program was deficient in several respects:

• The firm’s WSPs were not reasonably designed to ensure consistent compliance with IPO prospectus delivery rules.
• Specifically, while the firm’s written supervisory procedures required the firm to deliver a copy of a preliminary IPO prospectus to a customer expected to receive an allocation, the supervisory system and WSPs governing the process were not reasonably designed to verify that such delivery had taken place.
• As a result, JPMS failed to establish an adequate system for monitoring whether institutional customers received the required documents in a timely manner.

The deficiencies persisted for a four-year period, covering IPO allocations from 2018 through 2021.

By failing to maintain an effective supervisory system, JPMS violated the following provisions:

• FINRA Rule 3110(a): Requires members to establish and maintain a supervisory system reasonably designed to achieve compliance with applicable securities laws and FINRA rules.
• FINRA Rule 3110(b): Requires members to establish, maintain, and enforce written supervisory procedures.
• FINRA Rule 2010: Requires firms to observe high standards of commercial honor and just and equitable principles of trade.

Sanctions Imposed

Without admitting or denying FINRA’s findings, J.P. Morgan Securities consented to the following sanctions:

• Censure
• $150,000 fine

The settlement resolves the matter without additional restrictions on the firm’s underwriting activities.

Regulatory Context and Industry Takeaways

This action highlights FINRA’s continued scrutiny of IPO-related compliance practices, particularly prospectus delivery obligations. While prospectus delivery is a longstanding regulatory requirement, lapses in supervisory controls—even among large, well-resourced firms—can result in enforcement actions.

Key takeaways include:

• Supervisory systems must evolve with business practices. Automated processes and high IPO volumes require ongoing review to ensure compliance controls remain effective.
• Written Supervisory Procedures (WSPs) must be detailed and actionable. Generic or outdated procedures are insufficient to demonstrate compliance with delivery rules.
• Investor protection remains the guiding principle. Ensuring customers—both retail and institutional—receive accurate and timely offering documents is critical to maintaining fair and transparent capital markets.

Conclusion

While the $150,000 fine is modest relative to J.P. Morgan’s scale, the case underscores that even the largest firms face regulatory consequences for deficiencies in compliance programs. FINRA’s action serves as a reminder to all broker-dealers that supervisory obligations are fundamental to protecting investors and upholding market integrity.

The full settlement document is available here: FINRA AWC – J.P. Morgan Securities LLC.

According to the settlement, from at least June 2019 to November 2024, Wells Fargo had hundreds of municipal entity customers who transacted in both municipal and non-municipal securities through firm accounts. Despite these relationships, the firm was not registered as a municipal advisor — a designation required under Section 15B(a)(1)(B) of the Securities Exchange Act of 1934 when providing certain types of advice to municipal entities.

Lack of Supervisory Procedures and Guidance

FINRA found that Wells Fargo’s written supervisory procedures (WSPs) prohibited its brokers from advising municipal entities on investing proceeds from municipal securities issuances. However, the firm failed to:

• Provide clear guidance on what constitutes prohibited “advice” to municipal entities.
• Define other activities that might trigger municipal advisor registration.
• Implement a process to identify whether municipal entity deposits were proceeds from municipal securities issuances.
• Put in place effective controls to prevent or detect improper advice-giving.

Instead, Wells Fargo relied on provisions buried in client account agreements and annual account statement disclosures to discourage the deposit of such proceeds — measures that FINRA deemed insufficient and “not prominent.”

Regulatory Rules Cited

The enforcement action found violations of:

• MSRB Rule G-27 – Supervisory system requirements for municipal securities activities.
• FINRA Rule 3110(a) and (b) – Supervisory system and WSP requirements.
• FINRA Rule 2010 – Standards of commercial honor and just and equitable principles of trade.

The failures amounted to an inability to reasonably ensure compliance with federal and municipal securities laws governing municipal advisor registration.

Broader Regulatory Context

Municipal advisor registration rules, implemented after the Dodd-Frank Act, are designed to protect municipal entities from receiving conflicted or unqualified investment advice regarding the proceeds of bond issuances and other municipal securities transactions. Firms engaging in such advisory activities without registration may face enforcement action from FINRA, the Municipal Securities Rulemaking Board (MSRB), or the Securities and Exchange Commission (SEC).

Sanctions

As part of the settlement, Wells Fargo agreed to:

• Censure – A formal disciplinary action.
• $275,000 Fine – Payable to FINRA.

The firm neither admitted nor denied the findings but consented to the sanctions to resolve the matter.

Implications for Broker-Dealers

The case serves as a reminder to broker-dealers — especially those with municipal clients — to review and strengthen their supervisory systems and WSPs to ensure compliance with municipal advisor registration requirements. Firms must also provide clear, practical guidance to associated persons on what constitutes municipal advisory activity and implement proactive controls to detect and prevent violations.

Full details of the settlement are available in FINRA’s published disciplinary action here.

According to a FINRA Letter of Acceptance, Waiver, and Consent (AWC), the violations stem from two separate compliance failures occurring between May 2021 and March 2022.

Conflict of Interest in IPO Without Required Independent Oversight

In July 2021, Goldman Sachs acted as a lead underwriter in an IPO in which the firm had a conflict of interest under FINRA Rule 5121. The rule generally prohibits a member with a conflict from participating in a public offering unless a Qualified Independent Underwriter (QIU) is engaged to perform specific duties, including participating in the preparation of the registration statement and prospectus, and exercising the same due diligence standards as if it were solely responsible for the offering.

FINRA found that, although a QIU was named, the independent underwriter did not actually participate in preparing the registration statement and prospectus or conduct the required due diligence. This failure meant Goldman Sachs did not comply with Rule 5121’s conflict mitigation safeguards. By extension, the conduct also violated FINRA Rule 2010, which requires firms to observe high standards of commercial honor and just and equitable principles of trade.

Unregistered Individuals Performing Investment Banking Activities

From May 2021 through March 2022, Goldman Sachs allowed four individuals to engage in investment banking activities that required registration with FINRA, even though the individuals were not registered in any capacity during those periods.

Under FINRA Rule 1210, any person engaged in the investment banking or securities business of a member firm must be registered in the appropriate category. FINRA determined that Goldman’s supervisory system – including its written supervisory procedures – was not reasonably designed to ensure compliance with this requirement.

As a result, the firm violated FINRA Rules 1210, 3110 (Supervision), and 2010.

Sanctions

Without admitting or denying FINRA’s findings, Goldman Sachs consented to the following sanctions:

• Censure
• $250,000 fine

The AWC emphasizes that the violations involved both a lapse in ensuring independent oversight in a conflicted IPO and a systemic failure to enforce registration compliance for individuals performing regulated functions.

Regulatory Context

The case underscores FINRA’s ongoing focus on conflict of interest controls in underwriting activities and registration compliance for associated persons. IPO underwritings that involve conflicts require heightened safeguards, and member firms must maintain effective supervisory systems to ensure that individuals performing regulated tasks hold the necessary licenses.

Conflicts of interest in securities offerings can arise when an underwriter has a financial or ownership interest in the issuer or stands to receive benefits beyond standard underwriting compensation. The QIU requirement is intended to protect investors by ensuring an independent party vets the offering materials and due diligence process.

Likewise, registration rules are designed to ensure that only qualified, tested, and background-checked individuals perform investment banking or securities activities. Allowing unregistered persons to carry out such functions can expose investors and markets to misconduct risks and undermine industry integrity.

What Happens Next

While the $250,000 fine is modest relative to Goldman Sachs’ size, the matter serves as a reminder to all FINRA member firms – including large, complex institutions – that procedural lapses in IPO conflict oversight and registration compliance can lead to enforcement action.

The full FINRA settlement document is available here: FINRA AWC – Goldman Sachs & Co. LLC.

For over three and a half years, Iorio Law PLLC has represented numerous GWG L Bond investors nationwide, recovering more than $3.5 million through FINRA arbitration against multiple brokerage firms. With the GWG bankruptcy leaving investors with mere pennies on the dollar—as little as $26.94 per $1,000 invested—these SEC settlements underscore the urgency for harmed investors to explore additional recovery through securities arbitration.

For more information, please visit our GWG L Bond Investor Recovery Center.

The SEC’s Findings Against Emerson Equity, LLC

According to the SEC’s settled order (SEC Release No. 34-103674), Emerson Equity, as GWG’s managing broker-dealer, played a central role in distributing nearly $2 billion in L Bonds to retail investors across the country. The SEC found that:

• Violated Reg BI’s Care Obligation: Emerson Equity willfully violated the customer-specific prong of Regulation Best Interest’s Care Obligation for selling GWG L Bonds to investors who had very little investment experience.
• Supervisory Failures: Emerson Equity approved the sale of GWG L Bonds, ignoring red flags, including that Tony Barouti was inputting the same information on investor suitability forms for each client regardless of their individual situations.
• Violated Reg BI’s Compliance Obligation: Emerson Equity willfully violated Regulation Best Interest’s Compliance Obligation by failing to adopt and implement written policies and procedures to comply with Regulation Best Interest. For example, Emerson Equity’s written policies and procedures relating to the Care Obligation did not provide any guidance for how to evaluate retail customers’ investment profiles.

As part of the settlement, Emerson agreed to a cease-and-desist order, a censure, and to pay civil penalties and disgorgement totaling millions of dollars.

In addition to these findings, Iorio Law PLLC is investigating Emerson Equity’s sales and supervisory practices and whether the brokerage firm breached its duties. The conduct in question, includes:

• Inadequate Due Diligence: Whether Emerson Equity failed to conduct reasonable due diligence into GWG and the L Bond offering, particularly after GWG materially changed its business model in 2018 by shifting from life settlements to alternative asset investments with The Beneficient Company Group.
• Misleading Sales Practices: Whether Emerson Equity allowed L Bond sales to continue despite red flags—including SEC investigations, multiple auditor resignations, and missed SEC filings—that signaled serious liquidity and solvency risks.
• Conflicts of Interest and Incentives: Whether Emerson Equity and its associated brokers prioritized commissions as high as 8% on L Bond sales over their customers’ best interests.
• Supervisory Failures: Whether Emerson Equity did not reasonably supervise its network of selling brokers to ensure compliance with suitability and Regulation Best Interest (Reg BI) obligations.

The SEC’s Findings Against Tony Barouti

In a separate settled order (SEC Release No. 34-103675), the SEC sanctioned Tony Barouti, a Los Angeles-based registered representative who was one of the top sellers of GWG L Bonds.

The SEC found that Barouti:

• Violated Reg BI’s Care Obligation: Willfully violated the customer-specific prong of Regulation Best Interest’s Care Obligation for selling GWG L Bonds to investors who had very little investment experience.
• Submitted Inaccurate Forms: Had a practice of completing inaccurate Investor Suitability Questionnaire forms for his clients, many of whom were at or near retirement age. The SEC found that the Investor Suitability Questionnaires for a sample of 10 customers each stated that the customer had “Extensive (10+ years)” of investment experience in all listed asset classes, including but not limited to “Options/Derivatives,” “Venture Capital,” and “Commodities.” These forms did not accurately represent the actual investment experience of these customers. At least four of the customers had very little investment experience and did not know what products constituted options, derivatives, or venture capital.

Barouti agreed to be barred from the securities industry for a period of time and to pay a combination of disgorgement, prejudgment interest, and civil penalties.

In addition to these findings, Iorio Law PLLC is investigating Tony Barouti’s sales practices. Based on conversations with dozens of Mr. Barouti’s clients, the law firm’s investigation has found that Barouti:

• Sold L Bonds Without a Reasonable Basis: Recommended GWG L Bonds to retail customers without conducting adequate due diligence into the product’s risks, liquidity constraints, and changes in GWG’s business model.
• Failed to Disclose Material Risks: Did not fully and fairly disclose the speculative nature of the bonds, the lack of direct collateralization by life insurance policies, and GWG’s deteriorating financial condition.
• Ignored Suitability Concerns: Sold L Bonds to investors—including seniors and retirees—whose investment objectives, risk tolerance, and liquidity needs were incompatible with the product.

How This Confirms What We’ve Been Saying for Years

Our GWG L Bond Investor Recovery Center has long documented how brokerage firms—including Emerson Equity—ignored glaring red flags when selling these high-risk, illiquid bonds:

• Business Model Shift: In 2018, GWG transformed into a risky alternative asset company by merging with and ceding control to The Beneficient Company Group. Many investors were never told this.
• Financial Distress: SEC filings from 2019 onward showed delayed reporting, accounting issues, and auditor resignations—warning signs any competent due diligence review would have caught.
• Ponzi-Like Use of Proceeds: GWG used investor capital to pay interest and redeem earlier bonds, masking liquidity problems.
• Default and Bankruptcy: GWG defaulted on its L Bond obligations in January 2022 and filed for Chapter 11 bankruptcy three months later.

The SEC’s findings against Emerson Equity and Barouti align directly with our own investigation and what our clients have experienced: unsuitable recommendations, material misrepresentations, and failures to supervise.

Why FINRA Arbitration Is Still the Best Path for Recovery

While the SEC’s settlements are important, they do not compensate all individual investors for their losses. Regulatory fines are paid to the government, not to the harmed customers. That’s why FINRA arbitration claims remain the most effective route to recover GWG L Bond losses.

Key points for investors:

• Separate from Bankruptcy: Arbitration claims target the brokerage firm that recommended and sold the L Bonds—not GWG Holdings itself—so they are not affected by the bankruptcy discharge.
• Strong Precedent: Iorio Law PLLC has already recovered over $3.5 million for GWG investors in arbitration claims against more than 25 different broker-dealers.
• High Win Rates: According to FINRA statistics, GWG L Bond cases have produced monetary awards in 85% of cases that went to a final hearing—nearly three times the average investor win rate.
• Time Limits Apply: FINRA claims generally must be filed within six years of the investment, and in some cases sooner.

Brokerage Firms That Sold GWG L Bonds

While Emerson Equity was the managing broker-dealer, it relied on a nationwide selling network, including:

• Centaurus Financial, Inc.
• Western International Securities, Inc.
• Aegis Capital Corp.
• Arete Wealth Management, LLC
• Lifemark Securities Corp.
• Moloney Securities Co., Inc.
• Newbridge Securities Corporation
• Coastal Equities, Inc. (now Realta Equities, Inc.)
• Cabot Lodge Securities LLC
• And many others

If your brokerage firm is on this list—or even if it is not—you may have a valid claim.

What Investors Should Do Now

If you purchased GWG L Bonds through Emerson Equity, Tony Barouti, or any other broker:

1. Gather Documentation: Collect account statements, trade confirmations, offering documents, and any written communications with your broker.
2. Act Quickly: The longer you wait, the greater the risk that your claim may be barred by time limits.
3. Get a Free Case Review: At Iorio Law PLLC, we offer free, confidential consultations and work on a contingency fee basis—no recovery, no fee.

About Iorio Law PLLC’s GWG L Bond Representation

• Experience: Representing GWG investors nationwide since 2022.
• Proven Results: Over $3.5 million recovered for GWG investors through FINRA arbitration.
• Customer Satisfaction: ★★★★★ “August represented my associate and me in the GWG arbitration and accomplished what we thought was impossible. He successfully tracked down the elusive owner of a firm—who had sold the company shortly after our issue arose—and secured a fair settlement for us. Another law firm had already told me the case would be a ‘waste of their time,’ but Attorney Iorio took it on and was a bulldog.” – Allan F.
• Leadership: Founder August M. Iorio is a Director on the Board of the Public Investors Advocate Bar Association (PIABA) and has handled more than 700 securities arbitration cases.
• Nationwide Reach: Based in New York City, representing clients in all 50 states.

Take Action

The SEC’s settlements with Emerson Equity and Tony Barouti confirm a disturbing truth: many GWG L Bond sales violated core investor protection rules. But investors will not receive compensation from these regulatory actions. To recover your losses, you must take action.

📞 Call: (646) 330-4624
📧 Email: info@iorio.law
📍 Location: One World Trade Center, 85th Floor, New York, NY 10007
🖊️ Free Case Review: Contact Form

Your fight is our fight. We are committed to holding negligent brokers accountable and helping you reclaim your financial future.