Financial Advisor Alfred Vanderlaan, Westpark Capital Accused of Unsuitable GWG L Bond Sales

Financial Advisor Alfred Vanderlaan, Westpark Capital Accused of Unsuitable GWG L Bond Sales

The recent allegations against financial advisor Alfred Vanderlaan and his former firm Westpark Capital are serious and concerning for investors. According to FINRA records, Vanderlaan allegedly recommended unsuitable investments in high-risk, illiquid GWG L Bonds to two retail customers in 2020 and 2021. These recommendations were reportedly not in the customers’ best interests based on their investment profiles.

As a financial analyst and legal expert with over a decade of experience, I’ve seen firsthand how these types of unsuitable investment recommendations can devastate investors’ portfolios and financial well-being. It’s crucial for investors to thoroughly vet their financial advisors and understand the risks associated with any recommended investments.

In this case, FINRA alleges that Vanderlaan willfully violated Regulation Best Interest (Reg BI) under the Securities Exchange Act of 1934, as well as FINRA Rule 2010. Reg BI requires brokers to act in the best interest of retail customers when recommending securities, putting the customer’s interests ahead of their own. Violating these rules is a serious offense that can result in suspensions, fines, and other disciplinary action.

The GWG L Bonds at the center of this case were unrated, high-risk corporate bonds issued by GWG Holdings to fund their operations. GWG initially purchased life insurance policies, but later pivoted to providing liquidity for alternative assets. Despite this shift, the company faced significant financial challenges. The L Bonds were sold to retail investors as speculative, illiquid investments only suitable for those with substantial financial resources. In 2022, GWG defaulted on its L Bond obligations and ultimately filed for bankruptcy, leaving many investors with substantial losses.

Alfred Vanderlaan’s background and complaints

According to his FINRA BrokerCheck report, Alfred Vanderlaan has a troubling history of customer complaints. He has thirteen complaints on his record and was registered with several firms that have faced regulatory issues, including:

  • Westpark Capital, Inc. (CRD#:39914) from 05/20/2019 to 06/02/2022
  • Sandlapper Securities, LLC (CRD#:137906) from 08/26/2011 to 04/24/2019 (firm expelled by FINRA on 06/30/2020)
  • Capwest Securities, Inc. (CRD#:30002) from 09/16/2005 to 08/18/2011 (firm expelled by FINRA on 12/24/2014)

This history of complaints and association with problematic firms is a red flag that investors should take seriously when considering working with a financial advisor. Financial advisor complaints are not uncommon, and investors should be diligent in researching their advisors’ backgrounds.

Understanding Reg BI and FINRA Rule 2010

Regulation Best Interest (Reg BI) is a crucial rule that went into effect on June 30, 2020. It requires broker-dealers and their associated persons to always act in the best interest of retail customers when recommending securities, investment strategies, or account types. This means putting the customer’s financial interests ahead of their own.

Under Reg BI, brokers must exercise reasonable diligence, care, and skill to ensure their recommendations align with a customer’s investment profile. This profile includes factors like age, financial situation, risk tolerance, and investment goals. Recommendations should not expose customers to excessive risks that are inconsistent with their profile.

Violating Reg BI also breaches FINRA Rule 2010, which mandates high standards of commercial honor and just and equitable principles of trade. Firms can be held liable for losses if they fail to properly supervise their advisors.

Consequences and lessons learned

The consequences for financial advisors who violate Reg BI and FINRA rules can be severe, including suspensions, fines, and permanent bans from the industry. However, the real victims are often the investors who trusted these advisors with their hard-earned money and financial futures.

As the famous investor Warren Buffett once said, “Risk comes from not knowing what you’re doing.” This case underscores the importance of investor education and due diligence. Before investing with any financial advisor, thoroughly research their background, disciplinary history, and the firms they’ve been associated with using tools like FINRA’s BrokerCheck.

It’s also crucial to understand the risks and characteristics of any recommended investments. Don’t be afraid to ask questions and seek second opinions. Remember, if an investment seems too good to be true, it probably is.

Sadly, cases like this are all too common. According to a 2020 study by the Stanford Law School, more than 12% of financial advisors have a record of misconduct. Bloomberg reports that investment fraud and bad advice from financial advisors cost Americans billions of dollars each year. Investors must remain vigilant and proactive in protecting their interests.

If you’ve suffered investment losses due to unsuitable recommendations or misconduct by a financial advisor, don’t hesitate to seek legal counsel. Experienced securities attorneys can help you navigate the FINRA arbitration process and potentially recover your losses.

The case against Alfred Vanderlaan and Westpark Capital serves as a sobering reminder of the importance of working with trustworthy, ethical financial professionals who truly put their clients’ best interests first. By staying informed and advocating for yourself, you can help protect your financial future and hold bad actors accountable.

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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