Securities Arbitration Lawyer Blog
Iorio Altamirano LLP and its experienced GWG Holdings L Bonds attorneys continue to investigate and file claims against Centaurus Financial for its sale of risky and speculative GWG L Bonds to mom-and-pop investors.
The law firm’s investigation is ongoing after two separate FINRA arbitration panels awarded investors damages in connection with the sale of L Bonds by their brokers and brokerage firms. In the first case, an arbitration panel in Los Angeles, California, held two brokers liable for their negligence in selling GWG L Bonds to an investor and awarded over $1 million in damages. In the second case, a FINRA arbitration panel in Boston, Massachusetts, awarded an investor $280,000 in damages, finding that brokerage firm Ages Financial Services, LTD was liable for not properly informing the investor about the risks of GWG L Bonds.
Iorio Altamirano LLP represents dozens of GWG L Bond investors across the country and encourages investors who are taking a “wait and see approach” to act now. As the GWG Wind Trustee begins to liquidate GWG’s assets, it is becoming more evident that the GWG L Bonds, now the New Series A1 WDT Interests, are nearly worthless.
In 2020, notwithstanding GWG’s financial challenges and change in business strategy, Centaurus Financial actually increased the amount of GWG L Bonds that it would allow retail investors to purchase. After the cap was raised, many brokers aggressively sold more L Bonds to their clients and encouraged them to invest up to the new maximum limits.
Iorio Altamirano LLP continues to believe that GWG L Bonds investors’ best avenue for potential recovery of losses is to file a separate FINRA arbitration claim against their brokerage firms. Iorio Altamirano LLP has already helped GWG L Bond investors recover over $1.4 million in losses.
Investors who purchased GWG L Bonds through Centaurus Financial or any other broker-dealer are encouraged to contact Iorio Altamirano LLP (www.gwglawyer.com) for a free and confidential consultation and to review their legal rights. We can review and analyze potential claims and advise individuals of their legal rights without obligation or cost.
To read more about GWG L Bonds and the alleged misconduct, please visit our investigation page: Iorio Altamirano LLP’s Investigation of GWG L Bonds.
Centaurus Financial (CRD No. 30833)
Centaurus Financial is a dually registered investment adviser and broker-dealer headquartered in Anaheim, California. The firm is registered in 53 U.S. states and territories and has nearly 600 registered representatives nationwide.
GWG Holdings, Inc. sold the GWG L Bonds through a dealer-manager and a network of regional broker-dealers, including Centaurus Financial, who pitched the products to individual retail investors. GWG’s dealer-manager and selling agents, such as Centaurus Financial, received up to 5% of the principal amount of the GWG L Bonds sold. The selling brokerage firms also received additional compensation and commissions, up to 8% of the aggregate gross proceeds from the sale of GWG L Bonds.
Centaurus Financial was one of the largest sellers of the GWG L Bonds to retail customers between 2018 and 2022, receiving at least $3.6 million in commissions from GWG Holdings for brokerage services. Only Emerson Equity LLC, the dealer-manager, sold more L Bonds to retail investors than Centaurus Financial during this period. Accordingly, we believe that Centaurus Financial sold approximately $70 million in GWG L Bonds during this time period.
Upon information and belief, GWG L Bonds were sold by the following brokers who were associated with Centaurus Financial:
- Marc Korsch, Sarasota, FL (CRD No. 5525226) – Barred from the securities industry.
- Tony Kassaei, Irvine, CA (CRD No. 4375259) – Barred from the securities industry.
- Cindy Lucille Porto Chiellini, Lexington, SC (CRD No. 1015592)
- Katherine Nishnic, Lexington, SC (CRD No. 2499553)
- Atul Makharia, Lexington, SC (CRD No. 5070762)
- Otoo Ramon Bohon, Jr., Tucson, AZ (CRD No. 5677597)
- Gregory Richards, Scottsdale, AZ (CRD No. 288898)
- Steven Nielsen, Gilbert, AZ (CRD No. 4184826)
- George Howard, Germantown, TN (CRD No. 2958866)
- Eric Kuchherzki, Burlingame, CA (CRD No. 2529623)
- Valentino Scott, West Hills, CA (CRD No. 1497615)
- Mark Williams, Carmel, CA (CRD No. 4061842)
- Nicholas Ellis, Tustin, CA (CRD No. 1082891)
- David J. Segarra, Las Vegas, NV (CRD No. 4482059)
- Atul Makharia, Lexington, SC (CRD No. 5070762)
- Donna Payne (Donna Klink), Summerland, CA (CRD No. 1007323)
- William Fuentes, Simi Valley, CA (CRD No. 1330327)
- Dick Coppin, Twain Harte, CA (CRD No. 865875)
Brokers and brokerage firms like Centaurus Financial are required to make investment recommendations that are suitable and in the best interest of their customers. Brokerage firms and financial advisors must also be truthful and disclose all material information and risks of a security when making a recommendation. Retail investors have the right to make an informed decision about whether they are willing to accept the risk of a security. Firms and brokers must also conduct reasonable due diligence on products they offer before recommending them to any clients. When a firm or advisor fails to meet these standards of conduct, they can be held liable for damages.
Trouble with Regulators
Centaurus Financial has repeatedly been sanctioned for running afoul of securities and FINRA rules.
In February 2023, Centaurus Financial agreed to pay a $750,000 civil penalty after the SEC charged the firm in connection with the unsuitable recommendation of variable interest rate structured products to retail customers. The SEC’s order found that Centaurus failed to implement, and its branch manager failed to follow, Centaurus’ customer-specific suitability procedures and that Centaurus violated the broker-dealer books and records provisions of the federal securities laws. The SEC’s order found that Centaurus violated Sections 17(a)(2) and 17(a)(3) of the Securities Act of 1933 (“Securities Act”) and Section 17(a) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rules 17a-4(e)(5), 17a-4(f)(2), and 17a-3(a)(17)(i)(B)(3) thereunder. The SEC concluded that Centaurus failed reasonably to supervise the firm’s brokers.
In September 2022, FINRA’s Department of Enforcement filed a civil complaint against Centaurus Financial and one of its brokers. The complaint alleges that the broker sold Unit Investment Trusts (UITs), non-traded real estate investment trusts (REITs), and non-traded business development companies (BDCs) to customers, causing fees and commissions that could have been avoided if the broker, who was also a registered investment advisor, had taken advantage of his investment advisory relationship with the customers. The broker’s conduct allowed him and Centaurus to share in the selling commissions that his customers incurred while providing his customers with no additional benefits. The complaint alleges that the recommendations were unsuitable because there were lower-cost UITS, REITs, and BDCs available. The broker and Centaurus allegedly put their own financial interests ahead of their customers.
In June 2021, the SEC ordered Centaurus Financial to pay $1.2 million over disclosure failures and misleading statements to clients regarding investment advice it gave about mutual funds and cash sweep money market funds. The SEC’s order found that Centaurus Financial engaged in practices that violated its fiduciary duty to its advisory clients, including making misleading statements and providing inadequate disclosures regarding its receipt of 12b-1 fees from client investments, and although Centaurus was eligible to self-report to the SEC, it did not do so. Centaurus Financial consented to a cease-and-desist order and a censure, and agreed to pay disgorgement of $907,377, prejudgment interest of $124,019, and a civil penalty of $250,000. The firm also agreed to distribute funds to harmed clients and comply with certain undertakings.
About Iorio Altamirano LLP
Iorio Altamirano LLP is a securities arbitration law firm located in New York, NY. We represent investors nationwide and vigorously pursue FINRA arbitration claims on behalf of investors to recover investment losses.
We have over 20 years of combined experience as securities arbitration lawyers and have helped investors recover investment losses in over 1,000 cases. Our firm will file a FINRA securities arbitration claim on your behalf on a contingency fee basis to try to recover your losses. If we do not obtain a recovery, you do not owe us a legal fee.
If you have invested in L Bonds offered by GWG Holdings, contact securities arbitration lawyers August Iorio at august@ia-law.com or Jorge Altamirano at jorge@ia-law.com. Alternatively, call the firm toll-free at (855) 430-4010.