Eileen is involved in the firm’s securities practice and has over a decade of experience in the legal world. She received her law degree from American University in 2005.
It is very unlikely that you will get any money back from GWG Holdings anytime soon, since GWG declared bankruptcy and the process of restructuring and dividing up their assets could take years. Our law firm is recovering investor money by suing the brokerage firms that told their financial advisors to recommend GWG L-Bonds (without doing the necessary due diligence to ensure the investment was safe.) Join dozens of investors like you who trust us to get their money back.
Visit our page here for updates on GWG and our litigation.
Former Chairman Brad Heppner took $174 million from GWG before bankruptcy, says Wall Street Journal
According to the Wall Street Journal, after Brad Heppner first laid the groundwork to combine his startup Beneficient with GWG back in 2017, he and his business entities went on to collect at least $174 million in cash and other benefits from GWG before it declared bankruptcy in April of 2022.
This included $59.1 million to a ranch with “luxurious amenities” like swimming pools and horse stables used “almost entirely” by Heppner’s family, friends and associates, the WSJ said citing sources familiar with the topic.
The WSJ article notes that after GWG “collapsed” in April 2022, thousands of individual investors, many of them elderly or retired, were owed approximately $1.3 billion.
GWG files for Chapter 11 bankruptcy, has billions in liability, per WSJ; investors seek to recover losses
MarketWatch reports that on Wednesday, April 20, 2022, GWG Holdings announced that it was filing for Chapter 11 bankruptcy along with its two subsidiaries GWG Life LLC and GWG Life USA LLC. Per Bloomberg news, the bankruptcy filing states that GWG has estimated liabilities between 1 and 10 billion dollars. The bankruptcy announcement comes in light of an ongoing SEC investigation into the company’s accounting issues. According to the Wall Street Journal, GWG has sold over $1.6 billion worth of L Bonds, but now investors remain stuck in these illiquid investments.
GWG L Bond investors can file individual arbitration claims against their broker-dealers for recommending risky, illiquid products, without impacting their eligibility for potential recovery from GWG bankruptcy proceedings or class action lawsuits. Contact our securities attorneys today for a free consultation.
GWG Preparing to file for Bankruptcy after Auditor Resigns, Missed Payments to Investors, reports WSJ
As reported by the Wall Street Journal, GWG stated in an April 1, 2022 SEC filing that it was unable to file its 2021 annual report and other financial statements because the company still hasn’t found an auditor to replace its previous auditor that resigned in late 2021, Grant Thornton. The fact that GWG still hasn’t found an auditor is a likely sign that the company is preparing to file for bankruptcy, according to InvestmentNews. An anonymous GWG L Bond investor interviewed by InvestmentNews estimates L Bonds to be worth just 20 or 30 cents on the dollar at this time.
February 14, 2022 Letter to investors: GWG in default, unable to pay investors
In February 2022, GWG Holdings (GWGH) officially defaulted after missing an SEC deadline to make millions of dollars’ worth of payments to investors. In a letter (read the letter here) sent out to GWGH investors on February 14, 2022, GWG announced that L Bond sales remain paused, all interest, maturity, dividend, and redemption payments to investors are suspended, and redemption requests are deferred. GWG is in the process of “identifying and evaluating restructuring alternatives” which it expects to “take at least another three to four weeks, and may take longer.” Investors now own securities that they cannot sell or redeem, and both L Bond and Redeemable Preferred Stock holders will not receive their promised monthly payments.
GWG Holdings pauses sale of L Bonds and fails to make dividend and interest payments; unable to meet financial obligations
GWG had previously announced in January 2022 that it had paused the sale of L Bonds retroactively to January 10, 2022, and that the Board of Directors retained the services of a restructuring advisor to identify and evaluate options for the company to meet its financial obligations. GWG also admitted in the January investor letter and a previous 8-K filing that it has failed to make millions of dollars’ worth of interest, maturity, dividend, and redemption payments on its L Bonds.
What Are L Bonds?
An L Bond, first sold by GWG in 2012 under the name “Renewable Secured Debenture,” is a type of bond that finances the purchase and premium payments of life insurance contracts bought in the secondary market. These products supposedly offer a higher return than publicly traded fixed–income bonds to account for the risk that the insurance policy benefits may not be paid. L Bonds are often marketed as secure, low-risk products that provide a steady stream of income, but they are also illiquid and involve significant risk and speculation. And because L Bonds are not publicly traded, they aren’t as closely regulated as other types of bonds.
Brokerage firms like Centaurus, Emerson Equity, Cabot Lodge, may have failed to disclose risks of GWG Renewable Secured Debentures (L Bonds)
GWG Holdings (NASDAQ: GWGH) is a Texas-based publicly traded financial services company that mainly sells life insurance and alternative investments. According to SEC filings, GWG has sold billions of dollars in L Bonds in recent years and relies “significantly” on the sale of L Bonds to meet its financial obligations in order to pay investors.
Several U.S.-based brokerage firms and financial management institutions have recommended GWG Holdings products, including California-based broker-dealer firm, Emerson Equity. additional brokerages we know have sold L Bonds to retail investors include:
- Centaurus Financial
- Ni Advisors
- Capital Investment Group
- SW Financial
- Landolt Securities
- Lion Street Financial (Stiba Wealth Management)
- Coastal Equities
- National Securities
- Cabot Lodge Securities
Financial advisors and brokerage firms have an obligation to do their due diligence, properly disclose potential risks, and recommend suitable products based on investor needs and requests. Gibbs Law Group and Silver Law Group are reviewing potential claims on behalf of GWG Holdings investors who may have suffered significant losses after they were recommended unsuitable L bonds by GWG Holdings.
Nasdaq previously threatened to delist GWG Holdings after missing several key filings; company under investigation by SEC
On April 16, 2021, GWG Holdings was notified that it was not in compliance with Nasdaq’s listing requirements after it failed to file financial statements for the first three quarters of 2021. Nasdaq then threatened to delist the company. In its end of year report, GWG admitted that it was in financial trouble due to several factors, including an ongoing SEC investigation and the pause of L Bond sales:
“The potential NASDAQ delisting and our current inability to sell L Bonds as discussed above, 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 discussed elsewhere in this Form 10-Q, 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.”
Shortly after, on December 31, 2021, the company’s independent auditor resigned after GWG announced that it would not file its annual report on time, according to an SEC 8-K filing. As of early 2022, the company’s stock price has plunged as low as $3.19 following the news of the company’s troubling financial woes.
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