GWG Holdings, Inc., which trades on NASDAQ as GWGH, paused sales of its L bonds, publishing on its website, simply, "The sale of L Bonds is paused." GWG's move comes on the heels of the issuer missing $13.6 million in payments to investors who previously purchased its L Bond product.
In failing to distribute $13.6 million to investors, GWG not only placed itself at risk of future default, but already began causing present losses that only look to grow as time goes on.
This is why it is important for brokerage customers who invested in GWG Holdings L Bonds to reevaluate the circumstances under which their broker or investment adviser recommended the products, which were deemed unsuitable in FINRA's previous disciplinary reports (such as Moloney Securities representative Candice Montie or Strategic Financial Partners broker David Escarcega)
With elderly clients front and center in the Escarcega AWC—FINRA determining that Escarcega fraudulently misrepresented GWG Holdings debt instruments to senior citizen investors—it is important to review the fine print of GWG, especially in relation to a broker's recommendation that may have been unsuitable or downright reckless.
For example, GWG Holdings' prospectus filed with the SEC states, "an investment in our L Bonds is not suitable for investors that require liquidity in advance of their L Bond’s maturity date."
Driving home the point, the prospectus later concludes, "The L Bonds are only suitable for persons with substantial financial resources and with no need for liquidity in this investment."
In other words, unsophisticated investors whose net worths do not qualify under the heading of "substantial financial resources" may have a claim against a broker who recommended a product to them that the SEC filing warned would be unsuitable.
If you invested with a broker, financial adviser, or broker-dealer who unsuitably recommended the illiquid GWG Holdings L Bonds offering, despite GWG's own warning about the product's risks and lack of suitability for many potential clients, and this product's illiquid, complex, and risky features have resulted in losses or other financial harm to your interests, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.