GWG Holdings, Inc. is a Texas-based publicly traded financial services company. It largely focuses on selling life insurance policies and other alternative investments.
Introduced in 2012, GWG’s Renewable Secured Debentures, later given the name L Bonds, are privately issued alternative investments. They are mainly marketed to retirees. Although advertised as secure, low-risk investment opportunities, L Bonds have resulted in significant losses for investors across the United States.
L Bonds Attorney
If you or a loved one have suffered losses from these supposedly high-yield investments, contact the experienced GWG holdings bonds fraud attorney of Oakes & Fosher, LLC now.
We offer a free, private consultation. We’ll discuss your situation and help you understand your legal options to recover your damages. Our team operates on a contingency basis for each client nationwide. You don’t pay us unless we collect for you.
The Background of GWG Holdings Filing for Bankruptcy
In December 2021, the Securities Exchange Commission (SEC) announced its investigation into GWG Holdings, Inc. The investigation began shortly after the company’s external auditor resigned. This was likely due to the firm’s admittance of unreliable Annual Reports in 2019 and 2020.
Then, on February 14, 2022, following the discovery of insufficient accounting methods, GWG Holdings defaulted on its payment obligations to L Bondholders, ending their 30-day grace period. The company’s inaction on bond sales and payments left investors frustrated and uncertain of the future.
GWG Holdings Bond Investment
According to the Wall Street Journal, on April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy following auditor resignation, accounting difficulties, and failure to pay investors millions of dollars in interest payments after a pause in L Bond sales.
As a result, many investors are uncertain whether they will recover their investment in the L Bonds due to GWG’s inability to make interest and maturity payments and the recent bankruptcy filing.
What Are GWG Holdings L Bonds?
L Bonds were created and sold by GWG Holdings to finance life insurance policies from policy owners, acting as a secondary market for life insurance.
As privately traded investments, L Bonds supposedly offer a higher return than their fixed-income public counterparts to account for the illiquid nature of the bonds and higher market risk.
Despite these greater risks, the L Bonds were marketed through a broker-dealer distribution network as low-risk alternative investments. Further, their private nature also means that the bonds aren’t as closely regulated.
GWG Holdings Bond Payments
Policyholders, mainly retirees, would sell their life insurance policies to GWG in the secondary market. As the new owner, GWG would handle the premium payments and receive the payout from the insurer upon the investor’s death. L Bonds, therefore, financed the life insurance policy purchases.
Their original goal was to purchase the assets with hopes it would generate greater return than the cost to purchase, finance, and service. However, the company’s inability to maintain cash flow with the underperforming L Bonds, in addition to illegitimate accounting practices, have left investors with an illiquid investment and significant damages.
Filing a Claim Against Negligent Brokerage Firms
L Bondholders placed their trust and retirement savings in their brokerage firms and financial advisors, who recommended they invest in a low-risk, safe bond.
These brokerage firms must perform due diligence before recommending an alternative investment product. These broker dealers were aware of the private nature and high-risk financing of the insurance products. However, some brokers sold these products as a safe alternative to other lower interest-paying products.
By doing so, these firms have breached their fiduciary duty. They have jeopardized their clients’ savings with illiquid investments from a company now filing for bankruptcy.
The brokerage firm’s must only recommend suitable investments for their clients, consistent with their age, net worth, risk tolerance, and investment experience.
If you’ve found yourself in a situation where an investment recommended by your brokerage firm has resulted in unexpected losses due to what you believe is negligence or a breach of fiduciary duty, you might be wondering about the steps to take to file a claim against the firm.
Below is a simplified guide to help you understand the process:
Look Over Your Papers
First, get all the papers and emails related to your investments.
This includes:
The contract you signed
Any advice they gave you about what to invest in
How those investments have been doing
Talk to a Securities Arbitration Lawyer
Next, talk to a lawyer who knows a lot about problems with investments. Our firm has lawyers who can explain what happened and if you can do something about it.
Collect Proof
With your lawyer’s help, put together all the proof that shows the brokerage firm didn’t do what they were supposed to. This includes all the papers and emails you found, plus anything else that shows what the firm told you versus what actually happened.
Make Your Claim
A lot of the time, you’ll need to settle your problem with the firm by going through arbitration. Arbitration is like a special kind of court for investment issues. Our lawyer will help you file a claim in the right place, explaining what the firm did wrong and what you want to fix.
Get Ready for Arbitration
Getting ready for arbitration means:
Gathering all your important documents
Deciding what witnesses might need to speak
Working out your main points
Our lawyers will do a lot of this work to make your side of the story strong.
Go to the Arbitration Hearing
At the arbitration hearing, both you and the brokerage firm will get to tell your sides of the story. You can show your evidence, ask questions, and say why you think you’re right. After hearing everything, the arbitrators will decide what should happen.
Follow the Decision
The arbitrators’ decisions are usually final. You and the brokerage firm must accept them. If they say the firm must compensate you for your loss, the firm will need to do that.
GWG Holdings L Bonds Fraud
The brokerage firms’ failure to perform adequate due diligence, recommending unsuitable investments, and failing to adequately disclose the risks of the L Bonds was a breach of their duty to clients. In some cases, it rose to the level of fraud. You can hold these firms responsible for their actions.
Many investors, however, are unsure of their legal options following their significant losses.
Those who have invested in GWG Holdings’ L Bonds can file individual arbitration claims against their brokerage firms for the misrepresentations and unsuitable recommendations without impacting their eligibility for potential recovery from the bankruptcy proceedings.
If you or a loved one invested in GWG Holdings’ L Bonds and are at risk of losing part of your principal investments, contact the experienced securities fraud attorneys of Oakes & Fosher, LLC right away.
Again, those who misrepresented the facts or omitted key information when recommending these unrated, illiquid bond investments can and should be held liable. Further, brokerages who recommended L Bonds, knowing full well that they were unsuitable for their clients, could be guilty of negligence or misconduct.
At Oakes & Fosher, we’re dedicated to helping investors across the nation with alternative investment cases. If you or someone you know has lost money from GWG Holdings’ L Bonds and potentially faces losing their principal investment, contact Oakes & Fosher today at (314) 428-7600. We offer free, private consultation.
We work on a contingency basis, where you don’t pay unless we collect for you.
Oakes & Fosher, LLC
1401 South Brentwood Blvd.
Suite 250
St. Louis, MO 63144
In December 2021, the Securities Exchange Commission (SEC) announced its 
L Bonds were created and sold by GWG Holdings to finance life insurance policies from policy owners, acting as a secondary market for life insurance.
L Bondholders placed their trust and retirement savings in their brokerage firms and financial advisors, who recommended they invest in a low-risk, safe bond.