Linda Jill Wimsatt (also known as Linda Jill Eblowitz), formerly associated with WestPark Capital in Carlsbad, California, was subject to a regulatory action initiated by FINRA for unsuitable investment recommendations and violations of Regulation Best Interest (Reg BI). The regulatory action centered on Wimsatt’s recommendation of speculative GWG L Bonds to multiple retail customers, which were deemed inconsistent with the customers’ financial profiles and investment objectives. Letter of Acceptance, Waiver, and Consent, No. 2021070498104.
Wimsatt’s recommendations involved high-risk, illiquid investments that resulted in significant concentrations within customers’ portfolios. FINRA’s findings, which Wimsatt neither admitted nor denied, led to a four-month suspension, a $10,000.00 fine, and restitution totaling $20,974.75. The bonds were unsuitable for clients with moderate risk tolerance or income-focused objectives, directly contradicting their stated financial goals.
The findings detailed that Wimsatt’s recommendations resulted in excessive concentrations of GWG L Bonds in the portfolios of senior investors. For example, in January 2020, she advised Customers A1 and A2, a retired couple with moderate risk tolerance and a liquid net worth of $415,000, to invest $100,000.00 in L Bonds, representing 24% of their liquid assets. Their investment objective focused on income, not speculation. Similarly, in April 2020, she recommended Customers B1 and B2, a married couple with $2 million in liquid assets, to invest an additional $200,000.00 in L Bonds after prior investments of $425,000. This led to more than 30% of their liquid net worth being concentrated in these speculative securities, far exceeding the thresholds considered suitable for their profiles.
Additional allegations involved Customers C1 and C2, a senior couple with a liquid net worth of $2.24 million, who had already invested $300,000.00 in GWG L Bonds. In September 2020, Wimsatt recommended an additional $200,000.00 investment, bringing their total exposure to 22% of their liquid net worth. Despite their objectives of income and growth and a moderate risk tolerance, these investments exposed them to high risks inconsistent with their stated goals. Customer D, a senior investor with a liquid net worth of $1 million, was advised to invest $50,000.00 in L Bonds in August 2020 after a prior investment of $66,936. This resulted in an 11% concentration in the bonds, which was also determined to be unsuitable.
GWG L Bonds, issued by GWG Holdings, were speculative, unrated corporate bonds known for their high risk and illiquidity. The bonds were marketed through broker-dealers like WestPark Capital despite warnings in the offering documents about the speculative nature of these investments. The bonds were not directly secured by GWG’s life insurance portfolio, and the company’s financial instability, including a history of net losses, further emphasized the risks. GWG eventually defaulted on its obligations to bondholders in January 2022 and filed for bankruptcy in April 2022, resulting in significant financial losses for investors.
FINRA determined that Wimsatt’s conduct violated FINRA Rules 2111 and 2010, as well as Reg BI’s requirements to act in the best interests of retail customers. Specifically, the findings highlighted that her recommendations prioritized her financial interests, as evidenced by the commissions she earned, over the investment objectives and risk tolerances of her clients. These actions were inconsistent with her clients’ financial needs and the high standards of commercial honor mandated by FINRA Rule 2010. Wimsatt’s recommendations resulted in her clients holding disproportionately high-risk investments relative to their liquid net worth, exposing them to unnecessary financial risks.
According to FINRA Public Disclosure, several customer initiated investment related, FINRA securities arbitration claims were filed against Wimsatt. One case, FINRA Arbitration No. 23-02795, involved allegations of breach of fiduciary duty, negligence, breach of contract, and failure to supervise. The claim related to GWG L Bonds resulted in a $14,999.00 settlement on July 1, 2024, after the customer sought damages exceeding $5,000.00. This settlement did not include any financial contribution from Wimsatt, and the claim alleged violations of the customers’ best interest obligations, focusing on unsuitable high-risk investments in alternative bonds.
Another dispute, FINRA Arbitration No. 22-00607, was filed on March 21, 2022, and alleged misrepresentation of GWG L Bonds by Wimsatt during her tenure at WestPark Capital. Customers claimed that the bonds were unsuitable for their financial profiles and investment objectives. This arbitration resulted in a settlement of $35,000.00, paid entirely by Wimsatt, who faced allegations of negligence and failure to conduct adequate due diligence on the products she recommended.
A separate claim, filed under FINRA Arbitration No. 23-02876 on October 12, 2023, remains pending. The allegations include breach of fiduciary duty, negligence, and violation of Regulation Best Interest (Reg BI). Customers sought $155,000.00 in damages, stating that Wimsatt failed to accurately represent the risks of GWG L Bonds and ignored their moderate risk tolerance and investment objectives.
In another case, FINRA Arbitration No. 23-03069, filed on October 18, 2023, customers alleged Wimsatt failed to conduct reasonable due diligence and over-concentrated their portfolios in GWG L Bonds. The dispute involves damages exceeding $625,000.00 and is currently unresolved. The claim emphasized the significant financial losses incurred by customers who were unaware of the speculative and illiquid nature of the recommended investments.
An earlier dispute, FINRA Arbitration No. 22-02227, filed on September 8, 2022, also remains pending. Customers alleged that Wimsatt recommended high-risk and illiquid GWG L Bonds that did not align with their investment profiles. They sought $25,000.00 in damages and pointed to misrepresentation and failure to consider their income-focused objectives.
Another unresolved arbitration, FINRA Arbitration No. 23-01531, filed on May 25, 2023, alleged violations of Reg BI, breach of fiduciary duty, negligence, and failure to supervise. Customers are seeking $150,000.00 in damages, contending that Wimsatt recommended speculative investments without adequately considering their financial situations.
In yet another dispute, FINRA Arbitration No. 23-02395, filed on August 31, 2023, customers accused Wimsatt of recommending GWG L Bonds without proper due diligence or consideration of their liquidity needs. They sought $40,000.00 in damages.
Linda Jill Wimsatt’s employment history spans over 33 years and includes associations with several FINRA-member firms, including her time at WestPark Capital Inc., from November 2017 to October 2020 and American Trust Investment Services from November 2020 to January 20204.
