Silver Law Group recently wrote that it was investigating L Bonds offered by GWG Holdings, following GWG’s temporary suspension of sales of L Bonds. In March 2021, GWG notified the Securities and Exchange Commission (SEC) that it could not timely file its Forms 10-K and 10-Q, which are annual and quarterly financial reports and company disclosures. GWG said it needed additional time to complete these financial statements and related disclosures. This prompted a deficiency letter from Nasdaq in April 2021.
Background On GWG Holdings And L Bonds
GWG Holdings (GWGH) is a Dallas-based financial services firm that offers a variety of services including life insurance and alternative investments. GWG sold billions of dollars worth of L Bonds over the past several years, and investors are now growing concerned about the status of these investments.
Generally speaking, L Bonds are a relatively new financial product that purportedly offers higher yields than typical publicly traded, fixed income bonds. L Bonds are sold by life insurance companies that buy back the policies from policyholders. The bonds are supposed to help finance the purchase of the policies.
According to a prospectus published by GWG for the offering of $2 billion of L Bonds, the bonds were sold with varying maturity terms ranging from 2 years to 7 years, with interest rates ranging from 5.50% to 8.50%. These bonds likely carry much higher risk than traditional corporate bonds and other conservative investments.
L Bonds Are Risky Alternative Investments
Alternative investments are risky and often illiquid. Due to their complexity and the limited regulatory landscape, investors should be weary of investing in any alternative investment. Often, the complexity allows sellers to hide the high commissions and fees they earn from recommending the investment to unsuspecting customers.
Because alternative investments are not publicly traded, investors may be subject to prolonged illiquidity, or the inability to liquidate their investment for cash.
GWG Bond Offering
In July 2020, GWG announced that it was raising capital in a $2 billion offering of L Bonds. Emerson Equity LLC served as the managing broker-dealer for the offering and the bonds were sold through a network of participating brokerage firms, financial advisors, and stockbrokers.
Worried About Your L Bond Investment?
Silver Law Group represents the interests of investors who have been the victims of investment fraud and other financial misconduct. Managing Partner Scott Silver is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors nationwide in securities investment fraud cases. If you or someone you know invested in L Bonds, please contact Silver Law Group for a confidential consultation at email@example.com or toll free at (800) 975-4345. We often work on a contingency fee basis, meaning you don’t owe us anything unless and until we recover for you.