investor advocates

SEC Finds That Some Broker-Dealers Are Using Outdated, Incomplete, and Inaccurate Risk Disclosures

Published on: January 31, 2023 | by Iorio Altamirano

On January 30, 2023, the United States Securities and Exchange Commission (“SEC”) published a Risk Alert including its observations from Broker-Dealer Examinations Related to Regulation Best Interest (“Reg BI”). The risk alert highlights deficiencies observed during regulatory examinations, as well as weak practices by broker-dealers that could result in deficiencies.

Reg BI requires that brokerage firms and brokers act in the best interest of a retail customer at the time of a recommendation to purchase, sell, or hold a security or investment strategy. The broker-dealer and broker must place their retail customers’ interest ahead of their own financial interest. The standard of care also applies to recommendations of account types.

Reg BI requires compliance with four component obligations:

GWG Bankruptcy Update: Questions Remain as to When, or If, GWG L Bond Investors Will Receive Future Distributions

Published on: October 27, 2022 | by Iorio Altamirano

For the latest on Iorio Altamirano LLP’s investigation of GWG L Bonds, please see our most recent blog posts:

Broker-Dealers Sold GWG L Bonds Using Aggressive and Misleading Marketing

“GWG Was a Classic Ponzi Scheme” – Official Committee of Bondholders of GWG Holdings, Inc.

Western International Securities Denies Violating Regulation Best Interest in Recommending and Selling Risky and Illiquid GWG L Bonds to Retail Investors

Published on: September 15, 2022 | by Iorio Altamirano

On September 14, 2022, Western International Securities, Inc. filed its Answer to the Securities and Exchange Commission’s Complaint denying that the firm violated the standards under Regulation Best Interest (“Reg BI”) in approving, recommending, and supervising the sale of speculative, high-risk, and illiquid L Bonds issued by GWG Holdings, Inc.

The case, which is being litigated in the United States District Court of the Central District of California, is being closely watched by investors and the securities industry alike because it is the first substantive enforcement action brought by the SEC against a broker-dealer since Reg BI went into effect on June 30, 2020.

FINRA Sanctions Joseph Stone Capital for Excessive Trading in Customer Accounts

Published on: September 8, 2022 | by Iorio Altamirano

On September 8, 2022, FINRA announced that it had ordered Joseph Stone Capital L.L.C. (“Joseph Stone”) to pay restitution of approximately $825,000 to customers whose accounts were excessively traded by the firm’s representatives.

In related settlements, FINRA suspended eight current or former Joseph Stone representatives and required them to pay, collectively, an additional $211,000 in restitution to impacted customers. Additionally, FINRA suspended three Joseph Stone supervisors for failing to reasonably identify or respond to red flags of excessive trading and barred two representatives for refusing to respond to FINRA’s requests for information in connection with the investigation.

If you suspect your account was excessively traded at Joseph Stone Capital L.L.C., contact New York securities arbitration lawyers Iorio Altamirano LLP for a free and confidential evaluation of your account.

Newbridge Securities Corporation’s Customers Who Purchased GWG L Bonds Are Worried About Their Invested Capital

Published on: July 25, 2022 | by Iorio Altamirano

GWG L Bondholders who purchased the speculative, high-risk, illiquid, and unrated bonds through Newbridge Securities Corporation are worried after last week’s approval by the bankruptcy judge to allow GWG Holdings Inc. to enter into a new debtor-in-possession (“DIP”) financing package. The new DIP financing package includes an option for GWG Holding Inc. to sell its portfolio of life insurance policies for at least $610 million, approximately $1 billion less than GWG Holding Inc’s outstanding obligations to GWG L Bondholders.

Even though the portfolio of life insurance policies does not directly secure the GWG L Bonds, this development is significant for GWG L Bond investors because GWG Holdings Inc.’s largest tangible asset is its portfolio of life insurance policies. It is believed that the value of these tangible assets will significantly impact the outcome of GWG Holdings Inc.’s restructuring effort through its filing for Chapter 11 bankruptcy.

Upon information and belief, Newbridge Securities was a part of a network of broker-dealers who sold the risky GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for bankruptcy protection earlier this year, on April 20, 2022.

GWG Could Sell Its Portfolio of Life Insurance Policies for $610 Million, $1 Billion Less Than It Owes to GWG L Bond Investors

Published on: July 19, 2022 | by Iorio Altamirano

On July 18, 2022, the Texas Southern Bankruptcy Court approved a new debtor-in-possession financing package that includes an option to sell GWG Holding Inc.’s portfolio of life insurance policies to Chapford SMA Partnership, L.P. for at least $610 million.

Even though the portfolio of life insurance policies does not directly secure the GWG L Bonds, this development is significant for GWG L Bond investors because GWG Holdings Inc.’s largest tangible asset is its portfolio of life insurance policies. It is believed that the value of these tangible assets will significantly impact the outcome of GWG Holdings Inc.’s restructuring effort through its filing for Chapter 11 bankruptcy.

As of the bankruptcy filing on April 20, 2022, GWG Holdings, Inc. had over $1.6 billion in outstanding GWG L Bond obligations, mainly owed to retail investors.

Law Firm Investigating Dempsey Lord Smith, LLC for the Sale of GWG L Bonds and GPB Capital Funds

Published on: July 14, 2022 | by Iorio Altamirano

Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against Dempsey Lord Smith, LLC for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH) and limited partnerships created by GPB Capital Holdings, LLC.

On March 21, 2022, the Financial Industry Regulatory Authority (FINRA) ordered Dempsey Lord Smith, LLC (“Dempsey Lord Smith”) to pay nearly $100,000 in monetary fines and restitution for negligently omitting to tell four investors in an offering related to GPB Capital Holdings, LLC (“GPB Capital”) that the issuer failed to timely make required filings with the Securities and Exchange Commission (“SEC”), including filing audited financial statements. In addition, FINRA accused Dempsey Lord Smith of making unsuitable recommendations of GPB Capital securities to four investors. Dempsey Lord Smith consented to the sanctions.

Additionally, upon information and belief, Dempsey Lord Smith was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022. Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

Law Firm Investigating National Securities Corporation for the Sale of GWG L Bonds and GPB Capital Funds

Published on: July 8, 2022 | by Iorio Altamirano

Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against National Securities Corporation for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH) and limited partnerships created by GPB Capital Holdings, LLC.

On June 23, 2022, the Financial Industry Regulatory Authority (FINRA) ordered National Securities Corporation (“NSC”) to pay nearly $9 million in monetary fines and restitution for violating various SEC, NASD, and FINRA rules, including negligently omitting material facts to retail investors connected with offerings related to GPB Capital Holdings, LLC (“GPB Capital”). NSC consented to the sanctions after FINRA alleged that between April 2018 and July 2018, NSC negligently omitted to tell investors in two offerings related to GPB Capital that the issuers failed to timely make required filings with the Securities and Exchange Commission (“SEC”), including audited financial statements.

Additionally, upon information and belief, National Securities Corporation was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds. GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022. Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.

Certified Financial Planner Board Suspends Western International Securities Broker Patrick Egan After SEC Charges Related to Selling GWG L Bonds

Published on: July 8, 2022 | by Iorio Altamirano

The Certified Financial Planner Board (“CFP Board”) temporarily suspended Western International Securities Broker Patrick Egan after both the broker and firm were sued by the United States Securities and Exchange Commission (“SEC”) for selling GWG L Bonds that were not in the best interests of their customers. The suspension went into effect on June 21, 2022.

The CFP Board is a non-profit organization that serves at public by administering the Certified Financial Planner certification program. Accordingly, as a result of the suspension, Mr. Egan cannot use the “CFP” designation.

Mr. Egan was one of five brokers that were charged by the SEC on June 15, 2022, for failing to comply with the SEC’s Regulation Best Interest (“Reg BI”) care and disclosure obligations when recommending and selling GWG L Bonds to retail investors and retirees.

New York Law Firm Investigating the Sale of GWG L Bonds to Retail Investors by Great Point Capital LLC

Published on: June 23, 2022 | by Iorio Altamirano

Iorio Altamirano LLP, a securities arbitration law firm based in New York, NY, is investigating potential lawsuits and securities arbitration claims against Great Point Capital LLC for its sale of L Bonds issued by GWG Holdings, Inc. (GWGH). Upon information and belief, Great Point Capital LLC was a part of a network of broker-dealers who sold the speculative, high-risk, and illiquid GWG L Bonds.

GWG Holdings, Inc., which stopped making interest and maturity payments to GWG L Bond investors in January 2022, filed for Chapter 11 bankruptcy in April 2022.

Many GWG L Bond investors are skeptical that they will receive any significant portion of their principal back. Investment News has reported that one anonymous GWG L bond investor estimates that the GWG L Bonds may now be worth 20 to 30 cents on the dollar.