FINRA fined and suspended former Kingswood Capital Partners broker Phillip Curtis Anderson for unsuitably recommending senior customers invest in GWG L Bonds, a speculative investment, at a rate exceeding concentration limits for how much of a customer's portfolio may be invested in such a risky product.
GWG Holdings, Inc., according to FINRA, posed significant risk due to a history of net losses, with investigators writing that GWG failed to generate "sufficient operating and investing cash flows to fund its operations." GWG offered L Bonds to help fund its operations, but the regulator noted that GWG L Bonds were not rated and were not even directly secured by GWG's life insurance portfolio, which had comprised GWG's main business.
These factors made GWG Holdings and specifically GWG L Bonds a risky investment for many retail customers.
Phillip Anderson (CRD #814936) allegedly recommended the GWG L Bonds to senior retail clients for whom such a speculative and risky investment was not suitable. Furthermore, one customer purportedly invested 96% of their net worth in GWG, which exceeded concentration limits established to determine whether an investment is suitable based on a risk of loss inconsistent with the customer's investment profile.
In this case, the customer's risk tolerance preference was moderate, which according to investigators should have alerted Kingswood Capital and/or Anderson that the investment was not suitable. FINRA wrote that Anderson earned commissions in connection with the GWG L Bond sales, which were unsuitable for these senior customers.
According to his BrokerCheck file, Anderson also settled multiple customer disputes alleging unsuitable recommendations in GWG, describing an "illiquid alternative investment" that resulted in tens of thousands of dollars in damages. Additional complaints alleging overconcentration and risky private placement sales remain pending.
If you invested with Kingswood Capital Partners broker Phillip C Anderson or with any broker or investment adviser who unsuitably recommended you purchase GWG Holdings L Bonds or another risky product at a volume exceeding reasonable concentration levels and these improper sales have resulted in damages such as losses or excessive charges, fees, and commissions, 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.