Broker Alfred Vanderlaan Suspended Over Inappropriate GWG Bond Sales

Broker Alfred Vanderlaan Suspended Over Inappropriate GWG Bond Sales

The Seriousness of the Allegations Lvied Against Alfred Vanderlaan

The allegations against Mr. Vanderlaan, made public on January 22, 2025, by FINRA, should be a warning sign to investors of the potential pitfalls when dealing with investments in speculative, unrated corporate bonds like GWG L Bonds.

These allegations involve two particular incidents where Vanderlaan reportedly recommended these high-risk investments to two retail customers, flagrantly disregarding their individual investment characteristics. This underscores the potential dangers that lurk in the shadows of the financial landscape, especially when it involves speculative and high-risk financial products.

Quoting Warren Buffet: “Risk comes from not knowing what you’re doing,” this case serves as a stark reminder of the importance of financial advisors understanding their client’s tolerance to risk and aligning recommendations with it.

Investors who were already apprehensive about these allegations had their fears compounded when news broke that in January 2022, GWG defaulted on its L Bond obligations and subsequently filed for bankruptcy in April 2022. This placed retail investors in a precarious position, ultimately leading to severe financial loss in certain occasions.

But what does this mean for investors? A piece of disconcerting financial advice statistics suggests that close to 7.3% of financial advisors have been involved in misconduct. The fact that Alfred Vanderlaan may have disregarded both his clients’ best interests and FINRA regulations, does little to inspire confidence and trust in the financial industry.

Looking Into Alfred Vanderlaan’s Professional History

BrokerCheck, FINRA’s tool for verifying the legitimacy of financial brokers, brings to light some worrisome details about Alfred Vanderlaan’s past. Vanderlaan was suspended for three months and is currently not registered to practice as a broker.

The report reveals thirteen customer complaints have been filed against Vanderlaan throughout his career. His career history included engagements with companies like Western Capital and Sandlapper Securities before they were expelled by FINRA. This information gives potential investors a more comprehensive picture of Vanderlaan’s performance in the sector.

The FINRA Rule in Layman’s Terms

Regulation Best Interest (Reg BI), under the Securities Exchange Act of 1934, imposes upon broker-dealers and associates the duty to act in the best interest of the investor without giving preference to their financial profits. This rule is pivotal to enforcing fairness and impartiality within the finance sector.

The obligations under Regulation Best Interest encompass:

  • Care Obligation: Brokers should ensure their recommendations match the investor’s financial profile, considering elements such as risk tolerance, age, tax status, and financial objectives. Concentrating fixes on a single security or group to expose customers to disproportionate risks is a violation of this obligation.
  • Conflict of Interest Obligation: All financial advisors must make full disclosures about any potential conflict of interest that may affect their recommendations or impression.

Unravelling Consequences & Lessons Learned

Violating Reg BI is a breach of the FINRA Rule 2010, which upholds high standards of commercial honor and fair principles of trade. The implications of such infractions are serious – firms that do not adequately supervise their advisors can be held liable for the financial losses investors incur as a result.

The actions of Alfred Vanderlaan serve as a significant lesson for investors: a stronger emphasis must be placed on the importance of understanding the particulars of an investment, especially where risk is concerned. This case stands as a stark reminder that choosing a financial advisor is not a decision to be taken lightly, and certainly not without thorough research. After all, as famously stated by Benjamin Franklin, “An investment in knowledge pays the best interest.”

Remember – competence, trustworthiness, and client-centric focus should always remain at the core when opting for a financial advisor. This unfortunate tale of unrated, high-risk bonds might have ended differently for the quoted customers had they chosen differently.

Disclaimer: The information herein is derived from public sources and is provided "as is" without warranty of any kind. Legal matters may have subsequent developments, and market values may fluctuate. While we strive for accuracy, we make no representations about the completeness or reliability of this information. Readers should independently verify all content and seek professional advice as needed.
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