The SEC, the Securities and Exchange Commission, states that broker sales of the GWG L Bond are inappropriate for most investors in a recently filed complaint. Regulation Best Interest (BI) and/or the FINRA suitability rule require that financial advisors recommend this high-risk investment only to the most seasoned investors. Both rules also require that the advisor not make overly aggressive recommendations. Likewise, both prohibit recommendations based upon the advisor’s self interests. If your financial advisor recommended GWG L Bond you may be entitled to recovery of your losses. Please call 303-300-5022.
In the Complaint file June 15, 2022, the SEC identifies the L Bonds are inappropriate for the average investor. The Complaint states, “L Bonds were corporate bonds offered […] were high risk, illiquid, and only suitable for customers with substantial financial resources.”
The SEC states that the sale of L Bonds violated federal securities laws in many instances. “These recommendations violated Regulation Best Interest in several ways. Regulation Best Interest requires that a [financial advisor] act in the best interest of a retail customer when making a recommendation of a securities transaction (“Reg BI’s Best Interest Obligation”).”
Western International Securities is the focus of the current SEC investigation. The brokerage, however, is just one of many brokerages across the country that sold the GWG L Bond.
Federal regulations prohibit sales to investors who are not retired and looking to speculate. Regulation BI, under the SEC’s analysis, greatly limits who an advisor can recommend the L Bonds.
The SEC reiterates this in the Complaint. Advisors cannot recommend L Bonds to investors with “moderate-conservative or moderate risk tolerances, investment objectives that did not include speculation, limited investment experience, limited liquid net worth, and/or they were retired.”
Financial Advisors knew that the L Bond were inappropriate. The relatively large commissions offered for the sale of the L Bonds made many financial advisors sell the L Bonds anyway.
Regulations require advisors understand the risks of the L Bond. Regulation BI requires the performing of due diligence to understand the risks of an investment. Advisors stating that they did not know of the risk have no excuse.
We represent numerous individuals concerning the GWG L Bonds. Please call for and free and confidential consultation.