The SEC charged Western International Securities and five of its brokers with violating the new Regulation Best Interest Care Obligation rule by unsuitably recommending and selling $13.3 million-worth of risky and illiquid GWG Holdings L Bonds to retirees and other customers.
In naming Western International Securities brokers Nancy Cole, Patrick Egan, Andy Gitipityapon, Steven Graham, and Thomas Swan in its complaint, SEC alleged that these specific registered representatives failed to exercise due diligence, and failed to understand the totality of the risks associated with GWG Holdings and its subsidiary Beneficient Company Group's complex and risky L Bonds product when they recommended them to Western International customers without a reasonable basis as to believe the bonds were suitable, or in the customers' best interests.
Beneficient Company Group aka "Ben" announced its separation from GWG Holdings in November 2021.
The SEC described GWG L Bonds: "GWG L Bonds are a high-risk, illiquid investment," describing the problematic business model in use by GWG Holdings to purchase universal life insurance policies in the secondary market and then sell alternative debt instruments GWG called "L Bonds" to customers that analysts first warned about in 2015.
The SEC also wrote about the L Bonds' "high degree of risk, including the risk of losing [one's] entire investment" and the speculative nature of the product. GWG Holdings filed for bankruptcy in April 2022.
In bold text, the complaint reproduced GWG Holdings' own disclosure from its prospectus: "L Bonds are only suitable for persons with substantial financial resources and with no need for liquidity in this investment."
Our firm is prosecuting and investing GWG-L Bonds cases against Western International Securities and several more broker-dealers.
If you invested with Western International Securities brokers Nancy Cole, Patrick Egan, Andy Gitipityapon, Steven Graham, or Thomas Swan, or with any broker-dealer or investment adviser in GWG Holdings L Bonds and you are an investor with a conservative-to-moderate risk tolerance preference or were similarly averse to the risk of losing your entire investment, as well as a need for liquidity, and have suffered damages due to your broker's unsuitable recommendations to purchase the ill-fated GWG L Bonds, 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.