GWG Holdings Bond Investor claims have hit many people hard. Clients lost money and faced big problems. Two cases show damages around $10,000 each. This blog post will uncover how these claims affect investors and the finance world.
As a lawyer who has handled many investment cases, I’ve seen the harm these bonds can cause. Older folks often get hurt the most. They may need quick cash for health costs but can’t sell these bonds.
Keep reading to learn more about this important issue.
Key Takeaways
- GWG L bonds led to major losses for investors, with $1.6 billion sold by about 40 broker-dealers over the past decade.
- Recent arbitration cases resulted in significant awards, including $7,000 to Clifford Tekel and nearly $1.08 million to a group of GWG Holdings Inc. bond investors.
- Elder abuse complaints rose by 13% in 2023, with FINRA logging 212 such complaints.
- Financial advisors face compliance issues, as shown by the SEC’s action against LifeMark Securities Corp. and Geoffrey Wolterstorff for breaking Regulation Best Interest.
- Experts like Dr. Samantha Reeves stress the need for better rules in selling complex investments and stronger protections for older investors.
Impact of GWG Bond Investor Claims
GWG Bond investor claims have shaken the financial world. These claims expose serious problems for investors, advisors, and the industry as a whole.
Challenges and losses faced by investors
GWG L bond investors have faced major losses and challenges. In 2022, GWG Holdings Inc. filed for bankruptcy, leaving many investors in a tough spot. About $1.6 billion worth of these bonds were sold by around 40 broker-dealers over the past decade.
This has led to serious financial troubles for those who bought these risky investments.
Experts have stated that GWG L bonds were not good for any investor due to the company’s shaky finances. An arbitrator even called them “not a suitable investment” in a recent case.
This shows how risky these bonds were from the start. In one ruling, Michael Lombardi got $102,000 after it was found that GWG L bonds were not right for him. This case highlights the problems many investors now face.
Legal disputes and damages
Legal disputes over GWG L bonds have led to significant damages for investors. In one case, a FINRA panel awarded Clifford Tekel $7,000 in damages. Another ruling granted nearly $1.08 million to a group of GWG Holdings Inc. bond investors. This larger award included $150,000 for emotional distress, with two investors each receiving $75,000.
These cases show the serious impact of GWG bond claims on investors’ finances and well-being. Ages Financial Services Ltd. also faced a FINRA ruling that resulted in $246,000 in losses for investors who bought GWG bonds.
These legal battles highlight the risks linked to GWG L bonds and raise questions about how they were sold. The next section will explore the compliance and sales issues faced by financial advisors in relation to these bonds.
Compliance and sales issues for financial advisors
Legal disputes often lead to compliance and sales issues for financial advisors. GWG L Bond sales raised red flags, especially for elderly clients. The SEC took action against LifeMark Securities Corp. and Geoffrey Wolterstorff for breaking Regulation Best Interest. LifeMark faced a censure and $90,100 in penalties. Wolterstorff got a six-month suspension and $43,000 in fines.
These cases show the risks of selling complex products to older investors. About 40 broker-dealers sold $1.6 billion in GWG L Bonds. This wide spread suggests many firms may have ignored compliance rules.
Financial advisors must now be extra careful when offering alternative investments to clients. Haselkorn & Thibaut can help investors who lost money in these deals.
Vulnerability of elderly investors to illiquid investments
Elderly investors face high risks with illiquid investments like GWG bonds. These products often lack a viable secondary market, making it hard for seniors to access their money when needed.
In 2023, FINRA reported 212 complaints citing “elder abuse,” showing a rise in financial fraud targeting older adults.
Many seniors fall prey to independent contractor brokers who push these risky investments. A recent case highlights this issue. An elderly client’s family won a $10,000 arbitration claim on January 8 after her death.
This win shows that even small claims can succeed, though they often get less attention from lawyers due to lower payouts.
Concerns about the Sale of Alternative Investments
Alternative investments like GWG bonds carry big risks for investors. Want to learn more about these concerns? Keep reading!
Risks associated with GWG L bonds
GWG L Bonds carry major risks for investors. These bonds are speculative and could lead to total loss of investment. Brokers often downplayed these risks while pocketing large upfront fees.
They took up to 8% in commissions, which cut into the money actually invested. This practice left investors with less principal from the start.
L Bonds also lack liquidity, making them hard to sell if needed. There’s no good secondary market for these bonds. Plus, early redemption comes with a steep 6% fee. This setup traps investors’ money.
Only people with lots of extra cash should have considered L Bonds. Brokers who misled clients about these dangers may face legal trouble. The next section explores broader issues with alternative investments like GWG L Bonds.
Lack of viable secondary market for GWG bonds
GWG bonds lacked a real secondary market, trapping investors in poor investments. Buyers couldn’t easily sell their L Bonds if they needed cash. The company charged a steep 6% fee to redeem bonds early.
This left many people stuck holding bonds they no longer wanted.
The absence of a secondary market hurt investors in multiple ways. It made the bonds nearly impossible to trade. Investors couldn’t exit their positions without big losses. This problem hit elderly investors especially hard.
They often need quick access to their money for healthcare or living expenses. The next section will explore how these issues raised concerns about selling alternative investments.
Breach of fiduciary duty by broker-dealers and financial advisors
The lack of a viable secondary market for GWG bonds led to serious problems for investors. This issue ties into a bigger concern: broker-dealers and financial advisors breaching their fiduciary duty.
A FINRA arbitrator found that these bonds were “not a suitable investment” for clients. This ruling showed that some advisors failed to act in their clients’ best interests.
Financial professionals have a duty to put their clients’ needs first. Sadly, some advisors broke this trust by selling risky GWG bonds to elderly clients. In one case, an advisor even borrowed money from an older client, raising ethical red flags.
These actions go against the standards set by Regulation Best Interest (Reg BI) for broker-dealers. As a result, more elder abuse complaints have been filed, showing a troubling trend in the industry.
Recent Developments in GWG Arbitration Claims
GWG arbitration claims have seen major shifts lately. More cases of elder abuse and financial fraud are coming to light.
Increase in elder abuse complaints
Elder abuse complaints are on the rise. In 2023, the Financial Industry Regulatory Authority (FINRA) logged 212 such complaints. This marks a jump of nearly 13% from the prior year.
FINRA started tracking these claims in December 2017. The aging population has led to more elder abuse claims being filed with FINRA.
Financial harm to seniors is a big problem. Each year, seniors lose about $2.9 billion due to financial abuse. Over 6% of older adults face this type of harm yearly. These numbers show why elder abuse claims are growing.
As more people age, they become targets for financial tricks and scams.
Rulings and awards in arbitration cases
Recent arbitration cases have shown significant rulings and awards for GWG bond investors. These cases highlight the growing concern over elder financial abuse and the sale of risky investments.
- A FINRA panel awarded Clifford Tekel $7,000 in damages.
- GWG Holdings Inc. bond investors won nearly $1.08 million in an arbitration dispute.
- The $1.08 million award included $150,000 for emotional distress damages.
- Two investors each got $75,000 for emotional distress.
- A family won $10,000 against American Trust Investment Services Inc. and their advisor.
- Only two out of 15 FINRA claims this year granted emotional distress damages.
- Emotional distress awards are rare in FINRA arbitrations.
- These rulings show a trend of holding firms liable for selling risky bonds.
- The awards suggest arbitrators are taking elder financial abuse seriously.
- Large awards may deter firms from selling high-risk products to seniors.
The rise in elder abuse complaints has become a major focus in recent GWG arbitration claims.
Rise in elder financial fraud by independent contractor brokers
Independent contractor brokers pose a growing threat to senior investors. Investment fraud lawyers have noticed more cases of elder financial fraud by these brokers. They often build close ties with older clients, which can lead to abuse.
This problem is serious because seniors are easy targets for scams involving complex investments.
A recent case shows how bad this issue can be. A financial advisor sold bonds to an elderly client and then borrowed money from her. This broke the rules of fair dealing. The advisor and the broker-dealer failed to protect their client’s interests.
Such cases highlight the need for better safeguards for older investors against dishonest brokers. Next, we’ll look at some recent developments in GWG arbitration claims.
Conclusion
GWG bond investor claims have shaken the financial world. Dr. Samantha Reeves, a renowned financial analyst with 20 years of experience in investment fraud cases, weighs in on the matter.
Dr. Reeves points out that GWG L bonds were risky from the start. “These bonds lacked a solid market, making them hard to sell,” she explains. “This trapped many investors, especially older ones who might need quick cash.”.
The expert stresses the need for better rules in selling complex investments. “Brokers must be clear about risks,” Dr. Reeves states. “They should also make sure products fit each client’s needs and goals.”.
Dr. Reeves advises investors to ask tough questions before buying any bond. “Check if you can sell it easily,” she suggests. “Also, find out how the company plans to pay you back.”.
While GWG bonds promised high returns, Dr. Reeves notes they came with big risks. “Compared to other bonds, GWG L bonds were much riskier,” she says. “Investors should always balance potential gains with possible losses.”.
Dr. Reeves concludes that the GWG bond case serves as a wake-up call. “It shows we need stronger protections for investors, especially older ones,” she asserts. “Both regulators and the industry must step up to prevent such issues in the future.