Investor Lawyers Blog

Investors in securities sold by GWG Holdings (“GWGH”), including L Bonds, preferred stock, and common stock listed on Nasdaq under the ticker symbol GWGH, may have legal claims, including possible claims if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

According to a January 18, 2022 Form 8-K filing with the Securities and Exchange Commission (SEC) the Board of Directors of GWG Holdings, Inc. (GWGH) has authorized GWGH’s management to retain the services of a restructuring advisor.  According to the same filing, GWGH expects t retain FTI Consulting, Inc. as its restructuring advisor, and Mayer Brown LLP as restructuring legal advisor “to assist the Company’s Board of Directors and management in evaluating alternatives with respect to its capital structure and liquidity.”

The putative restructuring comes amid continued financial struggles for GWGH.  GWGH had previously announced mounting losses, including $169.9 million in the first nine months of 2021 and a total of $168.5 million for fiscal year 2020.  GWGH has also disclosed a going concern and material weakness in internal controls in its recent financial filings. The going concern disclosure indicates there is substantial doubt about GWGH’s ability to meet its financial obligations as they come due over the next 12 months due to GWGH’s recent inability to raise capital, recurring losses from operations, and potential negative implications of the ongoing SEC non-public, fact-finding investigation. The internal controls disclosure indicated that management had determined that GWGH’s internal controls were not sufficient to ensure amounts recorded and disclosed were fairly stated in accordance with GAAP.  In summary, GWGH has disclosed its reported financial results’ accuracy cannot be relied upon, and that it may not be able to stay in business for any sustained period going forward.

Investors in securities sold by GWG Holdings (“GWGH”), including L Bonds and common stock listed on Nasdaq under the ticker symbol GWGH, may have legal claims, including possible claims if their investment was recommended by a financial advisor who lacked a reasonable basis for the recommendation, or if the nature of the investment was misrepresented by the stockbroker or advisor.

GWGH recently failed to make a scheduled interest payment of over $10 million due on certain securities sold to investors known as “L Bonds”.  GWGH’s common stock price has also plummeted by over half in 2022, from an opening price of $9.80 a share on January 3, 2022 to a closing price of $4.11 a share on January 25, 2022.

GWGH is a Dallas-based financial services firm that offers a variety of ‘services including life insurance and alternative investments. GWGH sold millions of dollars’ worth of L Bonds over the past several years, including sales to public investors through brokerage firms.  L Bonds are a financial product that purportedly offers higher yields than typical publicly traded bonds. L Bonds are sold by life insurance companies that buy back the policies from policyholders. The bonds are supposed to help finance the purchase of the policies. According to a prospectus published by GWGH for the offering of $2 billion of L Bonds, the bonds were sold with varying maturity terms ranging from 2 years to 7 years, with interest rates ranging from 5.50% to 8.50%.