Stefan Shimshidian (CRD# 3043669), a broker registered with Cabot Lodge Securities, violated industry rules when selling GWG L Bonds, according to investor disputes. Haselkorn and Thibaut is investigating the White Plains, New York-based financial professional for similar conduct. If you are a current or former client with concerns about your own accounts, contact them for a free consultation at 1-888-784-3315.
The information below is sourced from Mr. Shimshidian’s BrokerCheck profile, a Financial Industry Regulatory Authority record examined on February 18, 2025.
Allegation’s Facts, Case Information, and Impact on Investors
On November 21, 2024, an investor lodged a dispute involving Mr. Shimshidian, alleging breach of fiduciary duty, negligence, misrepresentation, breach of contract, and the violation of Regulation Best Interest. The claim stems from investments in GWG L Bonds and seeks $255,000 in damages. The dispute is still pending.
Between 2022 and 2024, three other parties of investors lodged disputes that Mr. Shimshidian’s firm settled. These claims detailed allegations of fraud, violations of state and federal law, negligence, Regulation Best Interest violations, and breach of fiduciary duty. Like the pending dispute, they stemmed from purchases of GWG L Bonds. His broker-dealer firm settled the disputes for more than $222,000 in total.
As reported in the news and legal filings, GWG Holdings, the Texas-based firm behind the L Bonds, filed for bankruptcy in April 2022. The company had marketed these risky, complex investments as a way to raise funds to buy life insurance policies on the secondary market. Before the bankruptcy, GWG defaulted on its bond obligations and halted L Bond sales amid an SEC investigation. The SEC has since filed charges against a brokerage firm that sold the L Bonds.
Investment fraud and bad advice from financial advisors can have devastating consequences for investors. According to a Bloomberg report, the Financial Industry Regulatory Authority (FINRA) ordered a record $70 million in fines against Robinhood Financial LLC in 2021 for systemic supervisory failures and significant harm to millions of customers. Investors who have suffered losses due to unsuitable recommendations or misrepresentations by their financial advisors may be able to recover damages through FINRA arbitration.
Financial Advisor’s Background, Broker Dealer, and Past Complaints
Mr. Shimshidian began his brokerage career in 1999 with Citicorp Investment Services. Over his 25-year career, he has worked at several firms including Quick & Reilly, Clarke Dodge & Company, and Allied Beacon Partners before joining his current firm, Cabot Lodge Securities, in 2013. He remains based out of the firm’s White Plains, New York office.
In addition to the pending GWG L bond dispute, Mr. Shimshidian’s BrokerCheck record discloses three other investor disputes that his firm settled between 2022-2024. All three centered on the sale of GWG L Bonds and alleged fraud, legal violations, negligence, breach of fiduciary duty and Regulation Best Interest violations.
Explanation in Simple Terms and the FINRA Rule
GWG L Bonds were high-risk, illiquid investments that the now-bankrupt firm GWG Holdings marketed and sold to investors through brokerage firms. GWG claimed it would use the funds raised to purchase life insurance policies.
However, the L Bonds were only suitable for investors who could withstand substantial losses and had no need for liquidity, according to GWG’s own offering documents. Brokers like Mr. Shimshidian have a duty under FINRA rules and regulations to only recommend investments that are suitable for their clients’ individual circumstances.
The pending and settled disputes involving Mr. Shimshidian allege he violated this duty and misrepresented the risks of the L Bonds to convince investors to purchase them. FINRA Rule 2111 requires brokers to have a “reasonable basis” to believe an investment is suitable for a particular customer based on that customer’s investment profile.
Consequences and Lessons Learned
For investors who lost money in GWG L Bonds recommended by Mr. Shimshidian or another financial advisor, filing a FINRA arbitration claim offers a potential path to recovery. This process allows wronged investors to pursue a claim and possible financial compensation from the brokerage firm that sold the unsuitable investments.
Any recovery obtained through FINRA arbitration would be separate from and in addition to any funds an investor may receive through the GWG Holdings bankruptcy proceedings. It’s crucial for investors to remember that just because an investment goes south does not necessarily mean their financial advisor is to blame.
However, if a broker makes misleading statements about an investment’s risks or recommends an unsuitable product, they may be held liable for the investor’s losses. The GWG L Bond disputes are an important reminder to thoroughly vet and understand complex investment products before committing funds.
As famed financier Warren Buffet once cautioned, “Risk comes from not knowing what you’re doing.” Mr. Shimshidian’s involvement in multiple disputes over the sale of a single, complex product raises red flags about his understanding and representation of the risks.
According to FINRA’s 2022 Exam and Risk Monitoring Program Report, a noteworthy 31,327 U.S. registered reps had disclosable events to report on their records at the end of 2021. While not all result from wrongdoing, complaint history is an important factor to consider when selecting a financial advisor.
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