Silver Law Group and co-counsel have filed a class action lawsuit against GWG Holdings (GWGH) and several of its principals on behalf of investors who purchased L Bonds from the company. The complaint alleges violations of the federal securities laws.
Silver Law Group may be able to help you recover your GWG L Bonds investment losses. Contact us at 800-975-4345 for a no-cost consultation.
Multiple serious issues with GWG have caused investors in L Bonds to become concerned that they may lose a significant amount of their principal.
Already under investigation by the SEC and behind on financial reporting, in January, 2022 the Dallas, Texas-based financial services company announced in a form 8-K filed with the SEC that it would not pay investors dividends owed for January.
The 8-K also stated that GWG’s board of directors authorized management to hire a restructuring advisor, and its independent public accounting firm did not stand for reappointment. The price of a share of GWG’s stock started 2022 at $9.60 and has since dropped to as low as $2.36.
What Is An L Bond?
An L Bond is a bond issued by a life insurance company that buys the policy back from the policyholder. L Bonds are supposed to offer higher yield than standard publicly-traded bonds. GWG claimed investors in their L Bonds could earn 5.5%-8.5% interest.
Bonds are generally considered low-risk investments that pay a consistent fixed income. L Bonds, however, involve significant speculation and risk. They’re also illiquid, so investors can’t sell them easily.
GWG sold billions of dollars’ worth of L Bonds over the last few years and relied on proceeds from the sales “to a significant extent” for liquidity, their 8-K states. The company had to stop selling L Bonds for most of 2021 due to late filing of their annual report.
Emerson Equity was the largest seller of the bonds and works closely with GWG to help sell the bonds to the retail public.
Class Action Lawsuit Filed
The class action complaint was filed on Friday, February 18, 2022 in the US District Court for the Northern District of Texas.
Allegations in the complaint include the following:
- “Beginning in 2018, Defendant Brad K. Heppner engineered GWGH’s L Bond distribution platform so as to enrich himself, leaving GWGH insolvent and the L Bonds virtually worthless. This scheme was accomplished through Defendants’ false and misleading statements and omissions, including in the June 2020 Registration Statement for the offering and sale of L Bonds.”
- That the L Bonds “lack value on account of GWGH’s inability to service them.”
- “As a result of Defendants’ wrongful acts and omissions, and the steep decline in the value of the L Bonds, Plaintiffs and other Class members have suffered significant losses and damages, which they now seek to recover through this action.”
Investors have already started to pursue individual FINRA arbitration claims against their financial advisor or broker that sold them GWG L Bonds, alleging that they failed to conduct adequate due diligence into the product and/or that it was unsuitable for their investing needs.
Scott Silver, Silver Law Group’s managing partner, was recently quoted in the Wall Street Journal, saying “many of our clients are retail investors who bought the bonds after hearing the products were safe and would offer a comfortable income stream for their retirement but that they were shocked to learn that their money was used to pay old investors while the company was under SEC investigation.”
Contact Silver Law Group For A No-Cost Consultation On Recovering GWG L Bonds Losses
Silver Law Group is a nationally-recognized law firm that represents investors who have been the victims of investment fraud. Scott Silver is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors nationwide and abroad in securities investment fraud cases.