Scott Silver Discusses GWG L-Bonds’ Impact On Elderly Investors

Silver Law Group managing partner Scott Silver recently spoke with Investment News on the continuing impact of the failed GWG Holdings illiquid and speculative L-Bonds on defrauded investors. Included in these cases is elder financial abuse, particularly when brokers overstep their boundaries and become more involved in their client’s life and financial affairs.

In the article, Scott referenced one of his clients, who was awarded compensatory damages and interest after being sold L-Bonds and other investments. He also loaned money to the broker who sold him the investments. In the arbitration action, the broker-dealers settled the claim while the advisor was found liable.

“We are seeing a rise in elder financial fraud by brokers, primarily those working as independent contractors. Those brokers develop close relationships with senior clients and abuse that relationship by borrowing money or otherwise seeking a role in a client’s estate, either as a beneficiary or a trustee to financially benefit themselves,” Scott said.

Under FINRA Rule 3240, brokers are not allowed to borrow money from clients except under very tight restrictions, such as only from close relatives, with written permission from the firm.

Stockbrokers Cannot Take or Borrow Money From Clients

Claims against brokers and broker-dealers over now-defunct GWG Holdings’ L-Bonds are now being decided in FINRA arbitration.

The article also focuses on investors who suffered smaller losses, especially elderly investors. While many firms focus on larger claims, those with $10,000 or less in losses are frequently overlooked. But many elderly investors who were over-sold on so-called “alternatives” such as L-Bonds, cryptocurrencies, “pot stocks” (marijuana investments), and other non-traded investments find themselves with no way to liquidate if they have a need for cash at some point.

Markets are now guiding investors towards these alternative investments, but they’re frequently unsuitable for elderly or inexperienced investors. Many who invested in these life-insurance backed securities assumed that their money would be available if they ever needed it, only to discover it wasn’t. There was no secondary market for reselling their L-Bonds, and GWG Holdings charged steep fees to investors who wanted to liquidate.

Then the company declared bankruptcy, leaving L-Bond holders in limbo.

In 2023, FINRA reported that 212 of the complaints filed in 2023 involved the term “elder abuse,” a 13% increase over the prior year. But continued complaints and arbitration involving GWG Holding’s L-Bonds mean that there will be related arbitration for some time.

For the elderly investors who expected better, they may not live long enough to see a resolution.

Are You a Victim of Elder Financial Abuse? 

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account has been handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning that you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.