Investor advocate law firm Iorio Altamirano LLP is investigating potential securities arbitration claims against Centaurus Financial, Inc. for its sale of L Bonds issued by GWG Holdings, Inc. Upon information and belief, Centaurus Financial, Inc. was a part of Emerson Equity LLC’s network of broker-dealers who sold the speculative, high-risk, and illiquid “L Bonds” issued by GWG Holdings.
On April 20, 2022, GWG Holdings, Inc. filed for Chapter 11 bankruptcy. Despite the unwelcomed news, GWG L Bond investors can file individual arbitration claims to recover losses from the brokerage firm that sold them these speculative bonds. Brokerage firms, like Centaurus Financial, Inc., 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. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.
Firms and brokers are also required to conduct reasonable due diligence on products they offer before recommending them to any clients. There are serious concerns that some broker-dealers failed to understand the material risks and features of GWG L Bonds. For example, in April 2020, Centaurus Financial raised the cap on how much the firm would allow customers to purchase despite GWG’s significant departure from the life settlements business and its foray into a risker alternative asset business, making it a much larger credit risk. The limit was raised from $100,000 to $150,000, or no more than 10% of the customer’s net worth (excluding primary residence), whichever is less. August Iorio, a managing partner of Iorio Altamirano LLP, was recently quoted in Investment News about Centaurus Financials’ remarkable decision.