GWG Blames SEC Investigation Of Sales Practices For Its Collapse

Posted on May 3rd, 2022 at 1:39 PM
GWG Blames SEC Investigation Of Sales Practices For Its Collapse

From the Desk of Jim Eccleston at Eccleston Law:

In its Chapter 11 bankruptcy filings, GWG has criticized the Securities and Exchange Commission’s (SEC’s) investigation of broker-dealers that sold at least $1.6 billion of its life-settlement backed bonds as a major reason for the firm’s collapse, including GWG’s defaulting on $13.6 million in payments to bondholders. 

According to the filings, GWG contends that the SEC’s 2020 investigation of the firm eventually included the sales practice of some of the 145 broker-dealer firms that sold the bonds. The SEC’s investigation of those broker-dealers negatively impacted GWG’s reputation in the marketplace as well as the firm’s capacity to raise funds from sales of L bonds, according to the company. While GWG reported $3.5 billion of total assets and $2.1 billion in total debt, most of those assets are illiquid or hard-to-value pools of life settlements. 

According to the court filing, the SEC served a subpoena onto GWG Holdings in October 2020 relating to an investigation into the firm’s accounting procedures and issuance of bonds. According to GWG, the SEC’s investigation significantly slowed sales. GWG previously signaled an intention to file for bankruptcy protection when the firm was unable to file its 2021 annual report and accompanying financial statements after its failure to hire an auditor to replace Grant Thornton. 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, regulatory and disciplinary matters.


Tags: eccleston law, gwg holdings, sec

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Jim, Stephany and the whole team were a God send.  We felt like we were put into a situation where we had no advocate. Jim’s team came in with a strong, well laid out strategy on how to get our story heard. Where our outside compliance company had no ability to help, our Broker Dealer was impenitent, and the regulators were aggressive pursuing vague rules, Jim came like a barricade against an assault we did not understand. Though you pay member dues to be affiliated with FINRA and a B/D, you have no voice. The only thing that is truly heard in this un-level playing field is a bulldog’s bark like Jim’s. I would encourage anyone to call Jim and his team to find a real ally in the tough and complicated world of securities regulation. They are truly the best.

Greg P.


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