GWG Holdings, Inc. Investment Losses
Have you suffered losses investing in GWG Holdings or GWG Renewed Secured Debentures? If so, the attorneys at The White Law Group may be able to help.
Debentures are a type of debt vehicle that carries significant risk. Often debentures are sold as unregistered securities pursuant to SEC exemptions laws. In general, unregistered securities are high-risk products that lack liquidity and are not suitable for the majority of investors.
GWG Holdings Inc. purchases life insurance policies sold in the secondary marketplace. GWG Holdings’ objective is to purchase life insurance policies that will potentially pay more when the policy matures than the cost spent to purchase the policy.
Part of GWG’s sales pitch to investors is allegedly that its bonds are collateralized by the life insurance policies that have been bought by GWG Life Settlements. These life insurance policies naturally are issued primarily by highly-rated, household name insurance companies.
High Risk Debentures
According to the Financial Industry Regulatory Authority (FINRA), though, these highly-rated insurance policies allegedly don’t serve to “secure” the debentures. As FINRA has stated in a complaint, “the policies are not collateral for the Debentures and instead have been pledged as collateral for a separate line of credit.” In addition, FINRA states that the use of the proceeds of the sale of the Debentures, rather than being lock-boxed for the purpose of buying highly-rated insurance policies, is allegedly barely restricted at all. FINRA further alleges that money received from sales of debentures could be used to make payments on other debentures or for general working capital of the company.
Broker’s that choose to sell high-risk debentures are required to perform adequate due diligence to determine if such investment is suitable for each individual client. Investment recommendations should be in line with the client’s age, investment experience, net worth, risk tolerance, investment objectives, and income.
When a broker overlooks suitability requirements or misleads a client, not only are they potentially liable for investment loss, the brokerage firm that employs such brokers may also be on the hook for losses.
Recovery of Investment Losses
If you invested in debentures issued by GWG Holdings Inc and would like to discuss your litigation options with a securities attorneys, please call The White Law Group at 888-637-5510 for a free consultation.
The White Law Group is a national securities fraud, securities arbitration, and investor protection law firm with offices in Chicago, Illinois and Vero Beach, Florida.
For more information on The White Law Group, visit www.whitesecuritieslaw.com.