Articles Posted in Western International Securities

In a court filing made on December 15, 2022, in the Chapter 11 bankruptcy court, the Official Committee of Bondholders of GWG Holdings Inc. (“Bondholder Committee”) alleged that broker-dealers sold GWG L Bonds using aggressive and misleading marketing even after it became clear that GWG’s business was failing and that the only way to repay bondholders was to continue to sell more L Bonds to existing and additional retail investors.  The Bondholder Committee, which represents the interests of GWG L Bondholders in the Chapter 11 bankruptcy proceeding, alleged that “GWG was a class Ponzi Scheme.”

However, much of the court filing, including specific allegations of wrongdoing, was filed under seal.

On February 1, 2023, the United States Bankruptcy Court for the Southern District of Texas unsealed several significant court filings, including a draft adversary legal complaint against certain current and/or former directors and officers of GWG Holdings, Inc., individuals, and corporate entities affiliated with or controlled by Brad Heppner, transferees of certain fraudulent transfers, and key broker-dealers who marketed and sold L Bonds.

On September 14, 2022, Western International Securities, Inc. filed its Answer to the Securities and Exchange Commission’s Complaint denying that the firm violated the standards under Regulation Best Interest (“Reg BI”) in approving, recommending, and supervising the sale of speculative, high-risk, and illiquid L Bonds issued by GWG Holdings, Inc.

The case, which is being litigated in the United States District Court of the Central District of California, is being closely watched by investors and the securities industry alike because it is the first substantive enforcement action brought by the SEC against a broker-dealer since Reg BI went into effect on June 30, 2020.

See AlsoLaw Firm Investigating the Sale of GWG L Bonds to Retail Investors by Western International Securities, Inc.

The Certified Financial Planner Board (“CFP Board”) temporarily suspended Western International Securities Broker Patrick Egan after both the broker and firm were sued by the United States Securities and Exchange Commission (“SEC”) for selling GWG L Bonds that were not in the best interests of their customers. The suspension went into effect on June 21, 2022.

The CFP Board is a non-profit organization that serves at public by administering the Certified Financial Planner certification program. Accordingly, as a result of the suspension, Mr. Egan cannot use the “CFP” designation.

Mr. Egan was one of five brokers that were charged by the SEC on June 15, 2022, for failing to comply with the SEC’s Regulation Best Interest (“Reg BI”) care and disclosure obligations when recommending and selling GWG L Bonds to retail investors and retirees.

After filing Chapter 11 bankruptcy last month and failing to file its annual report with the Securities and Exchange Commission earlier this year, GWG Holdings, Inc. will now be delisted from Nasdaq.   On May 17, 2022, the Nasdaq Stock Market announced that it would delist the common stock of GWG Holdings, Inc.  Since April 29, 2022, the stock has been suspended and has not been traded.

New York securities arbitration law firm Iorio Altamirano LLP is investigating potential legal claims related to investments in L Bonds offered by GWG Holdings, Inc. (GWGH). To read about the investigation’s findings, including a crucial event timeline, please visit our website:

GWG Holdings, Inc.’s bankruptcy filing revealed for the first time that the ongoing SEC investigation includes an examination of sales practices of the GWG L Bonds by the brokerage firms that sold the securities, including Emerson Equity and its network of regional broker-dealers.  According to the bankruptcy filing,  the United States Securities and Exchange Commission issued subpoenas and documents to individual brokerage firms selling GWG L Bonds.  As of the bankruptcy filing, GWG  Holdings, Inc.’ had over $1.62 billion in outstanding GWG L Bond obligations, mostly owed to retail investors.

**Update:  June 16, 2022** On June 15, 2022,  the United States Securities and Exchange Commission filed a lawsuit against Western International Securities, Inc., and several of its brokers, in California Central District Court in connection with approximately $13.3 million in L bonds sold to retail customers.  The firm is accused of failing to perform due diligence regarding the inherent risks associated with L Bonds. The brokers included in the suit are Steven Graham, Andy Gitipityapon, Thomas Swan, Nancy Cole, and Patrick Egan. 

The complaint alleges that although the prospectus for the June 2020 offering stated that L Bonds were only suitable for customers with “substantial financial resources,” Western International did not set any criteria or thresholds for its customers to invest in L Bonds. Western International Securities also did not restrict the sale of L Bonds to customers with certain risk profiles or investment objectives.

The complaint also alleges that the named brokers misunderstood important issues regarding GWG Holdings, Inc. and the GWG L Bonds, including that GWG significantly changed its business model beginning in 2018 and that GWG L Bonds were not directly collateralized by life insurance policies. As a result, the brokers recommended GWG L Bonds to retail customers without a reasonable basis to believe that the investments were in the customers’ best interest.

After months of working with legal and financial advisors to try and restructure outside of court, on April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court for the Southern District of Texas. The bankruptcy filing is a significant and troublesome development for GWG L Bond investors who invested substantial portions of their life savings into GWG L Bonds. According to GWG’s latest filing with the SEC, GWG has more than $1.6 billion in aggregate principal outstanding to GWG L Bond investors. A Chapter 11 bankruptcy will allow GWG Holdings to propose a reorganization plan.

Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.  Despite the unwelcomed news, GWG L bond investors are not without recourse. Many retail investors, including those represented by securities arbitration law firm Iorio Altamirano LLP, are filing securities arbitration claims against brokerage firms that sold these speculative, high-risk, and illiquid financial products.  These actions are separate and in addition to the bankruptcy proceedings.

GWG Holdings’ bankruptcy filing revealed for the first time that the ongoing investigation by the United States States Securities and Exchange Commission (SEC) includes an examination of sales practices of the GWG L Bonds by the Selling Group, including  Emerson Equity LLC and its network of regional broker-dealers.  According to the recent bankruptcy filing, the SEC issued subpoenas and document requests to individual brokerage firms beginning in late-2021.

New York securities arbitration law firm Iorio Altamirano LLP is investigating potential securities arbitration claims against Emerson Equity LLC and its network of broker-dealers for their sale of L Bonds issued by GWG Holdings, Inc. (Nasdaq: GWGH).

On January 15, 2022, GWG Holdings Inc., a company known for selling life-insurance bonds, missed interest and principal payments to L bond investors. The company is also reportedly seeking rescue financing in an effort to avoid bankruptcy after facing a series of accounting issues, financial stress, and an SEC investigation.

GWG’s L Bonds are speculative, high-risk, and illiquid securities that were sold as private placement offerings.

Over the past calendar year, GPB Capital investors have won over $2.4 million in monetary awards in 10 out of 11 (nearly 91%) arbitration claims that have proceeded to a final hearing.  According to public records, many other claims filed against broker-dealers who sold the private placements offered by GPB Capital have been settled for monetary compensation.

The judgments and awards come after years of filing lawsuits and arbitration claims by GPB Capital investors.

For our latest posts related to GPB Capital, please click here.

Western International Securities, Inc. is a broker-dealer and registered investment adviser (RIA) headquartered in Pasadena, California.  The firm was formed in April 1995.

Iorio Altamirano LLP is investigating claims on behalf of defrauded investors who were victims in the GPB funds scheme. The GPB funds were marketed to independent broker-dealers and investment advisers who would, in turn, sell the GPB funds to their retail investors. According to publicly available records filed with the SEC, broker-dealer Western International Securities, Inc. likely received sales compensation for selling the GPB funds to retail investors.

If you lost money in GPB funds with Western International Securities, Inc., you may have a claim.

The Financial Industry Regulatory Authority (“FINRA”) has barred compliance officer Corey White from the securities industry and fined him $20,000.  Mr. White was expelled from the brokerage industry for supervisory failures during his tenure as a compliance officer for Financial West Group in Westlake Village, CA, from January 2013 to July 2017.  Among other things, Mr. White was accused of failing to respond to red flags that indicated brokers were excessively trading customer’s accounts.  FINRA previously barred Financial West Group from the securities industry in February 2020.

Mr. White left Financial West Group in August 2017 to become a compliance officer at Western International Securities, Inc. in Pasadena, CA.

Financial West Group and Western International Securities Inc. seem to be cut from the same cloth.  Earlier this month, FINRA filed a disciplinary proceeding complaint against former Western International Securities broker Megurditch Patatian (aka Mike Patatian), alleging that he unsuitably recommended illiquid REITs to 59 customers.  Mr. Patatian worked out of the firms’ branch office in Westlake Village, CA.  You can read more about the charges here:

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