What are GWG L Bonds?

Before GWG Holdings Inc. defaulted on its L Bonds, the company encountered several financial issues. In October 2020, the Securities and Exchange Division of Enforcement sent it a subpoena. The company delayed its filing of a 10-K with the SEC and later stopped selling its L Bonds. In the meantime, the SEC’s Office of the Chief Accountant reviewed GWG’s financial statements and found numerous accounting problems. GWG subsequently admitted that its financial reports were unreliable.

The interest rate on GWG Holdings L Bonds remains fixed for the entire term of the bond, regardless of market interest rates. However, because the bonds are called, the issuer may recall them at any time without penalty. This means that investors can always sell them at a higher price, though they can only do so under certain circumstances. For example, if GWG is insolvent or suffers a disability, it may be able to buy back its bonds, but the penalty would be 6%.

L Bonds are a type of investment product that pools money from investors and uses the death benefits to pay investors. Although the company initially created the L Bond to make life insurance more affordable for investors, it subsequently changed its business model in 2018, investing much of the capital in riskier assets. As a result, many investors remained unaware of the material reorientation. The move also made GWG an even greater credit risk.

While the company is currently undergoing bankruptcy, the company issued L Bonds that matured for two to seven years and paid 5.50% to 8.50% per annum. The bonds were high-risk and illiquid, and should only be purchased by experienced investors with the right risk-reward profile. In addition, investors should seek legal help immediately if they purchased GWG L Bonds. If you are considering investing in GWG L Bonds, contact the Securities arbitration firm Iorio Altamirano LLP for a free consultation.

In addition to the failure of GWG L Bonds to meet their obligations, some investors also lost their entire initial investment. The problem stems from brokers’ misrepresenting the GWG L Bond as a relatively safe investment, while the risks were not fully understood. Because of this, investors may now file a claim against GWG Holdings. In addition, individual investors may also pursue claims against brokerage firms that failed to do adequate due diligence to protect investors.

Investors should consider filing a claim against GWG L Bonds if they were sold by GWG Holdings. The company’s bankruptcy filing is the latest example of a securities fraud. In April of 2022, GWG Holdings filed for Chapter 11 bankruptcy. Since the company’s demise, KlaymanToskes is assisting clients in their claims against brokerage firms and full-service firms that made a mistake.

from lawyers.buzz https://lawyers.buzz/what-are-gwg-l-bonds/
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