Securities Arbitration Lawyer Blog
Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against Aegis Capital Corp. for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH). Upon information and belief, Aegis Capital Corp. was a part of Emerson Equity LLC’s network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. Iorio Altamirano LLP has spoken to several retail investors who purchased GWG L Bonds through the recommendation of brokers registered with Aegis Capital Corp.
On April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy, allowing GWG Holdings to propose a reorganization plan. On May 17, 2022, the Nasdaq Stock Market announced that it would delist the common stock of GWG Holdings, Inc.
Many GWG L Bond investors, who have not received interest or maturity payments since January 2022, are skeptical that they will see a return of their invested capital. 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.
According to the bankruptcy filings, the SEC has been investigating the sales practices related to GWG L Bonds. It has been reported that the SEC’s investigation began in May 2021. We believe that this investigation includes the sales practices of Emerson Equity and its regional broker-dealers, such as Aegis Capital Corp.
Brokerage firms like Aegis Capital Corp. are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also disclose all material facts and risks of a security when making a recommendation. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.
Investors who purchased the L Bonds offered by GWG Holdings are encouraged to contact Iorio Altamirano LLP (gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.
For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, including a key event timeline, visit our firm’s investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.
About GWG L Bonds
An L bond is a financial product created by GWG. Initially, GWG pooled money from bond investors to purchase life insurance policies on the secondary market, pay the policy premiums, and then collect the death benefit when the insured individual passed away. However, beginning in 2018, GWG used the investor capital to invest in a new business model, exposing the company to much riskier alternative assets. Many GWG L Bond investors were utterly unaware that GWG materially reoriented its business model, which, in our view, made it a much bigger credit risk. Additionally, many GWG L bond investors were not told by their financial advisors that GWG used investor capital to pay out the high distributions owed to other GWG L Bond investors in a Ponzi-like scheme.
GWG Holdings offered the L Bonds with a maturity ranging from 2 to 7 years and paying an interest rate of 5.50% to 8.50%.
The L Bonds are speculative, high-risk, and illiquid private placement offerings. They are secured by the assets of GWG Holdings and a pledge of all of the common stock by its largest stockholders.
GWG L Bonds were likely not suitable for investors with a low-to-moderate risk tolerance or investors who had liquidity needs.
Investors who purchased GWG L Bonds should contact New York Securities arbitration law firm Iorio Altamirano LLP for a free and confidential consultation to review their legal rights.
Aegis Capital Corp. (CRD No. 15007)
Aegis Capital Corp. is an SEC-registered broker-dealer and investment advisor based in New York, NY. The firm, licensed to sell securities in 53 U.S. states and territories, currently has a roster of approximately 325 registered brokers and investment advisors across the country. Aegis Capital Corp., which has been a FINRA member since 1984, provides, among other things, services in connection with wealth management, retirement planning, investment banking, and fixed income trading.
Aegis Capital has repeatedly run afoul of FINRA rules, particularly regarding supervisory violations and excessive trading. According to the firm’s public disclosure report, it has been sanctioned 36 times by regulators for alleged misconduct. The most recent sanction was settled in November 2021. FINRA fined Aegis over $1 million and ordered the firm to pay an additional $1.7 million as restitution after FINRA’s investigation concluded that Aegis failed to establish, maintain, and enforce a supervisory system reasonably designed to achieve compliance with the suitability requirements of FINRA Rule 2111 as it pertains to excessive trading. FINRA alleged that Aegis failed to identify trading in hundreds of customer accounts that were potentially excessive and unsuitable
Additionally, according to a 2017 investigation by Reuters, Aegis Capital hired more brokers with a history of significant “red flag” public disclosures than all but thirty-one other brokerage firms in the country. In 2021 alone, at least seven Aegis Capital registered representatives, or former representatives, were subject to regulatory discipline by FINRA for alleged misconduct and rules violations while employed by Aegis Capital.
Financial institutions like Aegis Capital Corp. must properly supervise financial advisors and customer accounts. Brokerage firms must establish and maintain a reasonably designed system to oversee account activity to ensure compliance with securities laws and industry regulations. When a brokerage firm fails to supervise its financial advisors or the investment account activity sufficiently, it may be liable for investment losses sustained by customers.
See Also:
Iorio Altamirano LLP Files GPB Automotive Claim Against Aegis Capital Corp
About Iorio Altamirano LLP
Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.
We have nearly 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.
If you have invested in L Bonds offered by GWG Holdings through Aegis Capital Corp., contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (855) 430-4010.