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GWG L Bond Losses
Carlson Law currently represents and has filed cases on behalf of several investors who have lost money investing in GWG Holdings, Inc. L Bonds. The GWG L bonds were sold to investors, many of which were retirees looking for a safe source of income, through licensed financial advisors at investment broker-dealers. Your financial advisor’s firm may be liable to you, if for instance, they misrepresented the risk to you or over concentrated your portfolio in GWG L bonds. GWG L bonds are private investments that were not suitable for most investors.
GWG was a publicly-traded financial services company that offers life insurance products, alternative investments, and other services. According to public government filings, GWG began publicly offering L Bonds in January 2012 under the name “Renewable Secured Debentures,” and later changed the name to “L Bonds” in January 2015. The proceeds of the bond offerings were apparently used to purchase life insurance policies on the secondary market as investments, whereby GWG would profit when the insured person passed away. In order to raise capital for the purchase of life insurance policies, GWG sold L bonds investors, including several Carlson Law clients. Most of those L bonds were sold by licensed financial advisors.
In its 2020 year-end financial report filed with the Securities and Exchange Commission, GWG revealed that it was facing financial difficulties due to an ongoing SEC investigation. GWG wrote that its inability to sell L Bonds “in combination with significant recurring losses from operations, negative cash flows from operations, delays in executing our business plans, and any potential negative outcome from the ongoing SEC investigation…raise substantial doubt about our ability to continue as a going concern for the next 12 months following the filing of this Form 10-Q.”
On February 14, 2022, GWG announced in a letter to investors that it was pausing all sales, interest, maturity, dividend, and redemption payments to L Bond and Preferred Stockholders. The letter also stated that GWG will inform investors “if and when” it is able to restart cash payments in the future. Previously, on January 24, 2022, GWG disclosed in its annual report that it “did not make the January 15, 2022, interest payment of approximately $10.35 million and principal payments of approximately $3.25 million with respect to its L Bonds” product and that it would “voluntarily suspend its L Bonds sales effective as of January 10, 2022.”
On April 20, 2022, GWG announced that it and two of its subsidiaries (GWG Life, LLC and GWG Life USA, LLC) filed voluntary Chapter 11 petitions in the U.S. Bankruptcy Court for the Southern District of Texas. GWG claims that the filing is “part of a restructuring process intended to enable the Company to enhance its liquidity and ability to meet its financial obligations, while maximizing the value of its assets.”
GWG common stock was suspended on April 29, 2022, and has not traded on Nasdaq since that time. On May 17, 2022, Nasdaq announced that it would delist the common stock of GWG. On May 18, Nasdaq filed the Form 25 with the SEC to delist GWG. The delisting becomes effective ten days after the Form 25 is filed.
The GWG L Bonds were highly risky investments that should have only been offered to sophisticated institutional investors with a high risk tolerance. The investments were not suitable for retirees with a conservative investment approach who were looking for safety of their principal.
Carlson Law represents investors throughout the United States in claims against financial advisors and investment firms. If you or a loved one have suffered investment losses due to GWG L Bonds, please call us at 888-976-6111 or complete our contact form for a free and confidential consultation.