gwg holdings l bonds were sold by GWG Holdings Inc through financial advisers and broker-dealer firms. The bonds were marketed as low-risk investments that would generate regular monthly income and the return of principal at the bond’s maturity date. However, the company failed to disclose that the investments were backed by life insurance policies that were not guaranteed and were subject to change in value. Furthermore, the investment was also highly illiquid, meaning that investors could not sell their bonds if they needed the cash.
Who owns the most debt?
According to a letter to investors, the company had encountered “a significant amount of accounting issues that have resulted in a number of unreliable financial reports.”
Investors who purchased the gwg holdings l bonds invested their life savings into what they thought was a safe, reliable investment. However, these individuals are now facing substantial losses as GWG owes millions of dollars in interest and principle payments. Additionally, the firm has paused the sale of its L bonds until it can complete an annual financial statement.
Financial advisors and brokerage firms have a legal responsibility to conduct adequate due diligence on all investments they recommend. They must assess each client’s risk tolerance and investment objectives. The failure to conduct proper due diligence and recommending unsuitable investments violates these legal obligations, and in some cases, rises to the level of fraud. Investors who were misled by their financial advisers and brokers may have claims against the broker-dealer firms and the financial advisers they worked with.