GWG L bond investors sought as clients by another law firm

By Wendy Van Sickle

Columbus, Ohio, May 3 – A law firm says it is seeking clients ins securities arbitration claims before the Financial Industry Regulatory Authority for losses sustained from GWG Holdings, Inc.’s series L bonds, according to a news release.

The issuer “sold the speculative and high-risk L bonds, which pooled money from bond investors to purchase life-insurance policies on the secondary market, with the intention of using the payouts to pay the bonds when the life insurance policy holders died,” the release form the Frankowski Firm states.

The firm contends that brokerages that recommended and sold the bonds without disclosing their high risk may be liable and said many investors in the bonds were retired and invested their life savings in the bonds.

As previously reported on April 22, Dallas-based law firm Sommerman, McCaffity, Quesada & Geisler announced it was calling for the creation of a coalition of law firms, investors and bondholders to “form a united front” in the bankruptcy proceedings.

“GWG Holdings filed a bankruptcy and failed to provide disclosure concerning any specifics regarding holders of L bonds,” firm partner Sean McCaffity said in a press release at that time.

“We believe that more than $1.3 billion in bonds are currently being held by thousands of individual investors who may have viable claims against GWG and its management. It is essential that we form an investor-focused committee tasked with looking out for their interests in this case.”

The firm said it believes that it is essential that either an informal committee of claimants or an unsecured creditors committee with bondholder representation be appointed or authorized to act as a “watchdog” in the bankruptcy proceedings to assure that financial losses are investigated and claims pursued where necessary and feasible.

“The holders of L bond notes may have claims against GWG and its affiliated entities that could be impacted or otherwise adversely affected in the bankruptcy case, and we need to have a coordinated response,” McCaffity stated.

The company remains under investigation by the Securities and Exchange Commission.

GWG is a life insurance company based in Dallas. The company filed bankruptcy on April 20 under Chapter 11 case number 22-90032.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.