Investigation of GWG Holdings Inc.

For the past two years, the securities negligence and fraud attorneys at Colling Gilbert Wright PLLC have been investigating, filing and litigating Financial Industry Regulatory Authority (FINRA) arbitration claims on behalf of aggrieved investors who were allegedly improperly sold GWB L Bonds and subsequently sustained losses as a result.

The bonds were issued by GWG Holdings Inc., an out-of-business life settlement firm that is now in bankruptcy. About 40 broker- dealers, over the past decade, sold close to $1.6 billion in GWG L bonds, so-called because they were backed by life settlements, before the firm declared bankruptcy in April 2022, leaving investors holding the bag. Almost two years later, still no one knows what the GWG bonds are worth, with some executives and securities attorneys fearing they could be valued at mere pennies on the dollar.

The sale of these particular bonds was limited to second, third and fourth tier (mom & pop) investment firms, several of which have gone out of business as a result (see Titan Securities and Center Street Securities). Many of these firms were/are poorly capitalized, carry limited liability insurance and can’t or won’t be able to weather the litigation storm brough on my the GWG Bond failures. This means clients who bought GWG bonds from these failed securities firms and others teetering on the brink and now want to file claims against the firms, could be out of luck. Timing may be crucial. Clients unable to collect on valid claims…many times resulting in unpaid arbitration awards, has long been a problem in the securities arbitration world. Hence, GWG bond claims are likely to be an issue for the regulators and SROs to grapple with over the couple years.

Among the predominant claims being alleged against the selling firms and their advisors is they did not perform adequate due diligence of GWG bonds before, during or after the transaction…a strict requirement under FINRA rules. Apparently, the state and federal regulators were also late to the party when it came to oversight of these member firms and are now playing catch up. Not that it will ultimately help most GWG Bond investors as the issuer is in Bankruptcy and it appear many of the selling brokerage firms are on a similar path.

If you purchased GWG Bonds from a FINRA registered broker dealer or a Securities & Exchange Commission (SEC) registered investment advisor, please contact our offices for a complimentary case evaluation. Thank you.