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If you invested in GWG Holdings L Bonds and lost money, you are not alone. Thousands of investors were sold these high-risk, illiquid debt securities by brokers and financial advisors who failed to adequately disclose the risks involved. After GWG Holdings filed for Chapter 11 bankruptcy in April 2022, L Bond investors have faced devastating losses, with some losing 80% or more of their investment.
The securities fraud attorneys at The Frankowski Firm are investigating claims on behalf of GWG L Bond investors who were sold these products based on misleading information or for whom the investment was unsuitable. If your broker recommended GWG L Bonds without properly explaining the risks, you may be entitled to recover your losses through FINRA arbitration.
GWG Holdings, through its subsidiary GWG Life, LLC, purchased life insurance policies on the secondary market. The company used these policies as collateral to issue debt securities called “L Bonds.” When investors purchased L Bonds, they were essentially lending money to GWG Holdings, which used the proceeds to acquire additional life insurance policies. The company planned to collect death benefit payouts to repay bondholders and generate profits.
L Bonds were typically sold in $1,000 units with minimum investment requirements of $25,000. They were marketed with the promise of attractive yields, often between 5.50% and 8.50% annually. However, these high returns came with risks that many investors were not told about:
GWG Holdings’ financial troubles escalated over several years before culminating in bankruptcy:
According to Investment News, investors purchased approximately $1.6 billion in GWG L Bonds. Reports indicate that L Bond investors may lose as much as 80% of their underlying investment. The bankruptcy recovery process has provided only a fraction of what investors lost, making individual recovery claims through FINRA arbitration critical for affected investors.
GWG Holdings sold L Bonds through a network of approximately 145 brokerage firms. The SEC subpoenaed documents related to these firms’ sales practices. Among the firms believed to have been part of the GWG L Bond seller network are:
If your broker or brokerage firm sold you GWG L Bonds, they may be liable for your losses regardless of whether they are listed above.
GWG L Bond investors have several avenues for pursuing loss recovery. The most effective option for most individual investors is FINRA arbitration, which allows claims to be filed directly against the brokers and brokerage firms that sold the bonds.
FINRA arbitration is the primary forum for resolving disputes between investors and broker-dealers. Claims typically allege one or more of the following:
Filing a FINRA arbitration claim does not prevent you from also participating in the GWG bankruptcy proceedings. However, bankruptcy distributions have been minimal, covering only a small fraction of investor losses. FINRA arbitration claims target the brokers and firms that sold the bonds, not GWG Holdings itself, and have produced significantly better outcomes for many investors.
The Frankowski Firm represents GWG L Bond investors in FINRA arbitration claims nationwide. Our approach includes:
Yes. FINRA rules generally allow claims to be filed within six years of the event giving rise to the dispute. However, state statutes of limitations may impose shorter deadlines. Contact a securities attorney as soon as possible to evaluate your options and preserve your rights.
Filing a bankruptcy proof of claim does not prevent you from also pursuing a FINRA arbitration claim against your broker or brokerage firm. These are separate legal proceedings with different targets. The bankruptcy claim is against GWG Holdings, while the FINRA claim is against the financial professional who sold you the bonds.
Recovery amounts depend on the facts of each case, including the amount invested, losses sustained, and the strength of the suitability and disclosure claims. Investors may recover compensatory damages, interest, and in some cases, attorneys’ fees and costs. Some investors have recovered a significant portion of their losses through FINRA arbitration.
Helpful documents include account statements, trade confirmations, L Bond offering documents, and any written or electronic communications with your financial advisor. Even if you do not have all of these documents, our attorneys can help obtain the necessary records through the discovery process.
In most cases, no. L Bonds were high-risk, illiquid investments that were generally unsuitable for retirement accounts such as IRAs and 401(k) plans. Investors saving for retirement typically need relatively safe, liquid investments, making speculative products like L Bonds inappropriate for these accounts.
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If you or a loved one invested in GWG Holdings L Bonds and suffered financial losses, time may be limited to pursue your claim. The securities fraud attorneys at The Frankowski Firm are committed to helping investors recover the compensation they deserve. Call 888-741-7503 today for a free, confidential case evaluation, or fill out our online contact form to get started.