The Wall Street Journal reports that GWG Holdings, Inc., an alternative asset manager, filed for bankruptcy on Wednesday, Apr. 20, 2022. Known for selling life-insurance bonds to retail investors, GWG’s bankruptcy follows accounting issues and the resignation of the company’s auditor, which prevented the continued sale of its products.
GWG created “L Bonds” to function as high-yielding debt instruments. According to the Wall Street Journal, L Bonds “pooled money from bond investors to purchase life-insurance policies on the secondary market, aiming to use payouts from the policies when people die to repay the investors.” More than $1.6 billion in L Bonds are outstanding upon GWG’s declaration of bankruptcy. Most of these bonds are owned by individual investors.
What does this mean for bondholders? If your broker misrepresented or made unsuitable recommendations to invest in GWG L Bonds, they may be held accountable. Typically, claims are made against the brokerage firm—as opposed to a broker—for failing to properly represent the investment, make a suitable recommendation, or conduct the recommended due diligence on the investment. In cases like these, firms may be liable to compensate their fraud victims.
Fishman Haygood’s team of investment fraud lawyers represent investors who have suffered investment losses in claims against their brokers or financial advisors and the firms employing/supervising them relating to claims of fraudulent activity and financial schemes.
If you believe that you may have suffered financial losses due to these high-yield bonds, we may be able to help. Please contact us to discuss your potential claim.