Articles Tagged with Securities and Exchange Commission

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.

Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against Dempsey Lord Smith, LLC for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH) and limited partnerships created by GPB Capital Holdings, LLC.

On March 21, 2022, the Financial Industry Regulatory Authority (FINRA) ordered Dempsey Lord Smith, LLC (“Dempsey Lord Smith”) to pay nearly $100,000 in monetary fines and restitution for negligently omitting to tell four investors in an offering related to GPB Capital Holdings, LLC (“GPB Capital”) that the issuer failed to timely make required filings with the Securities and Exchange Commission (“SEC”), including filing audited financial statements.  In addition, FINRA accused Dempsey Lord Smith of making unsuitable recommendations of GPB Capital securities to four investors. Dempsey Lord Smith consented to the sanctions.

Additionally, upon information and belief, Dempsey Lord Smith was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022. Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. 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.

Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against National Securities Corporation for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH) and limited partnerships created by GPB Capital Holdings, LLC.

On June 23, 2022, the Financial Industry Regulatory Authority (FINRA) ordered National Securities Corporation (“NSC”) to pay nearly $9 million in monetary fines and restitution for violating various SEC, NASD, and FINRA rules, including negligently omitting material facts to retail investors connected with offerings related to GPB Capital Holdings, LLC (“GPB Capital”). NSC consented to the sanctions after FINRA alleged that between April 2018 and July 2018, NSC negligently omitted to tell investors in two offerings related to GPB Capital that the issuers failed to timely make required filings with the Securities and Exchange Commission (“SEC”), including audited financial statements.

Additionally, upon information and belief, National Securities Corporation was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022. Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. 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.

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.

Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against Great Point Capital LLC for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH).  Upon information and belief, Great Point Capital LLC was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds.

GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022.

Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. 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.

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.

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:  www.gwglawyer.com.

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.

Investors who purchased GPB funds in 2016 through a broker-dealer need to act now to preserve their legal rights. Failure to file an arbitration claim may prevent recovery of investment losses. Time is running out. GPB investors should act in 2022.

Key Takeaways:

  • Investors can potentially recover investment losses by filing claims against broker-dealers or investment-advisory firms that sold GPB private placement offerings for large commissions.

David Gentile, the disgraced founder and former CEO of GPB Capital Holdings LLC, has sued GPB Capital. Mr. Gentile seeks to make GPB Capital, which an independent court-appointed monitor is now overseeing, cover the legal costs for his defense against criminal and civil securities fraud.

In February 2021, Mr. Gentile was criminally charged with securities fraud, wire fraud, and conspiracy in federal court. The criminal complaint alleged that Mr. Gentile, among others, engaged in a scheme to defraud investors by misrepresenting the source of funds used to make monthly distributions to investors and the amount of revenue generated by two of GPB’s investment funds, GPB Holdings, LP, and GPB Automotive Portfolio, LP.

Separately, the SEC has charged Mr. Gentile, GPB Capital, and related entities with running a Ponzi-like scheme that raised roughly $1.8 billion from securities issued by GPB Capital. The SEC believes that as many as 17,000 retail investors nationwide have been defrauded.

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