GWG Holdings Investors Loss Recovery

In the United States Bankruptcy Court for the Southern District of Texas, GWG Holdings Inc. (NASDAQ: GWGH), also known as GWG, filed for Chapter 11 bankruptcy protection (case number 22-90032). The corporation’s total liabilities were estimated to be over $2.1 billion.

The recent drops in the value of various stock and bond investments issued, as well as the pending bankruptcy, could be devastating for GWG investors who sold (or may still be holding) various bonds, preferred stock, or common stock previously issued by GWG, as it could mean they have or will face investment losses as a result of the decline in the value of those securities.

While there had been some prior rumors and suspicions, one of the most concerning indicators to some investors came when GWG missed principal and interest payments of $3.25 million and $10.35 million on the L Bond issuance on January 15, 2022.

These late payments revealed a slew of other possible issues at GWG. Many GWG investors are currently considering filing lawsuits and filing FINRA arbitration claims as they weigh their alternatives for recouping their investment losses.

Matthew Thibaut, Esq., a founding partner of Haselkorn & Thibaut (InvestmentFraudLawyers.com), a nationwide law firm that is representing numerous clients in pending claims and investigating these potential claims on behalf of numerous other investors, commented: “Based on the calls we’ve been getting recently, it appears that some financial advisors who were marketing GWG-related products may have been committing securities fraud.”

Haselkorn & Thibaut has set up a GWG investor hotline at 1-888-614-9356, where experienced attorneys can answer investor questions during a fast, free, and friendly preliminary case evaluation call, and investors can then choose between their options for dealing with any losses they have incurred in their GWG investments.

Many financial advisors were naturally swamped with client calls expressing concerns and seeking answers following the early 2022 missing payments. Unfortunately, rather than accurately describing the current situation, many financial advisors initially attempted to downplay the problems at GWG, with some attempting to characterize the missed bond payment as an isolated one-off situation affecting only L Bond holders and pointing out that there was a purported grace period of 30 days for payment after it became due, and that while the missed payment was considered a default, investors should not be concerned. On multiple levels, this information turned out to be incorrect.

With the passage of time and the expiration of the grace period, fresh unfavorable news and, most recently, GWG’s bankruptcy declaration, investor concerns were fulfilled. The impact of GWG’s bankruptcy filing on investors is still unknown, and will likely stay so for some time.

On the surface, GWG L bond (as well as stock) investors appear to be in for some significant financial losses. Furthermore, GWG common and preferred stockholders should be concerned, as they are on the lowest rung of the bankruptcy ladder than bondholders.

GWG’s bankruptcy petition confirmed what had been rumored (up to that time) that the company was facing cash flow and other financial problems. Surprisingly, GWG appears to have argued that some of the responsibility for the company’s problems leading up to bankruptcy could be connected to expenses related to recent SEC examinations of its sales tactics for various securities.

Alternatively, if GWG was in fact breaking the applicable laws, rules, and regulations, their argument could imply that they believe GWG should be allowed to keep breaking them? While the solution is still uncertain, most investors appear to be more concerned with minimizing their financial losses than with trying to decipher GWG’s answers or figuring out the blame game.

A decrease in the number of sales of GWG’s L Bonds resulted in a capital deficiency, resulting in a liquidity shortage, according to GWG’s filings with the Securities and Exchange Commission (SEC) on January 18th. GWG Holdings Inc. also indicated at the time that the timely filing of the Annual Return of Form 10-K is in peril since the accounting firm tasked with the task has chosen not to offer such services anymore.

These elements did not appear to indicate a circumstance where a 30-day grace period would suffice, calling into question the integrity and depth of study undertaken by any financial advisor who was downplaying such events at the time. Even with the limited evidence available at the time, the totality of the circumstances does not appear to warrant such a finding.

As a result of the bankruptcy filing and accompanying financial troubles inside GWG, many investors are now facing the financial burden of not only missing interest payments but also the possibility of losing their investment principle. Some investors have already taken action, and are learning that filing a securities arbitration claim against the financial advisor and/or firm that sold them the products appears to be one option for recouping investment losses.

In many cases, the method looks to be the simplest, least expensive, most efficient, most straight path to take. These types of disputes are handled by the Financial Regulatory Authority’s (FINRA) Office of Dispute Resolution. While it is not the only option available, for some investors it may make sense.

The FINRA arbitration process restricts discovery to document exchanges and rarely includes witness depositions. As a result, investors frequently seek the advice of experienced attorneys who have handled similar cases in the past, as knowing what documents are required to effectively demonstrate both culpability and damages in these claims is critical for investors.

A review of appropriate documents, with the assistance of experienced counsel, could also assist investors in such claims to the extent investments were recommended to investors based on a negligent due diligence effort, negligent supervisory effort, or other various sales practice concerns connected to the manner in which the investment was sold by the firm and pitched to the investor by the financial advisor.

Please call Haselkorn & Thibaut, P.A. at 1-888-614-9356 or visit their website at www.InvestmentFraudLawyers.com if you have any information about GWG assets that were advised by brokers or financial advisors. If you have any doubts regarding your legal rights, or if you have purchased or acquired GWG shares or bonds and have issues, please contact now for a free consultation.

Doug Collins

Doug Collins

Doug has spent more than 10 years in the stock, financial, and commodity markets and is a financial journalist for several publications. He also worked as a reporter on the Chicago and New York commodity futures trading floors. He has reported on every U.S. futures market at least once as a journalist.Doug covers business, finance, breaking news for Lawyers.buzz. He graduated from Iowa State University, Ames, Iowa where he studied economics and journalism. [email protected]

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