David LaGrange, of Winterset, Iowa, a stockbroker formerly registered with Moloney Securities is the subject of an investment related, customer initiated FINRA securities arbitration claim seeking $577,000 in damages in connection with the recommendation and sale of GWG Holdings Class L Bonds.
According to FINRA Public Disclosure, David LaGrange has been the subject of four customer claims. In addition to this action, another investment related, customer initiated FINRA securities arbitration claim was filed in 2024, which alleged that LaGrange was negligent and made the unsuitable recommendation of GWG Holdings Class L Bonds. The matter was settled. Another investment related, customer initiated FINRA securities arbitration claim was filed in 2024, and also alleged alleged unsuitable recommendations, and negligence. This matter was also settled.
Most interestingly, in September 2024, the United States Securities & Exchange Commission brought a cease and desist action against Maloney Securities, LaGrange and others.
According to the SEC Action, The Securities and Exchange Commission deemed it appropriate and in the public interest that public administrative and cease-and-desist proceedings be, and hereby are against Moloney Securities Co., Inc. (Moloney), Donald R. Hancock, David F. La Grange, and Laura B. Barnes (collectively, the Respondents).
The commission finds that These proceedings arise out of Respondents’ failures to comply with Regulation Best Interest (Regulation BI) in connection with recommendations of corporate bonds called L Bonds offered by GWG Holdings, Inc. (GWG) to retail customers between June 30, 2020, the compliance date for Regulation BI, and approximately January 15, 2022 (the Relevant Period).
According to GWG’s disclosures during the Relevant Period: (a) L Bond investments involved a high degree of risk, including the risk of losing an investor’s entire investment; (b) L Bond investments may be considered speculative; (c) L Bond investments were only suitable for investors with substantial financial resources and no need for liquidity in the investment; and (d) GWG would use a portion of the L Bond proceeds to repay existing L Bond holders. In addition, in November 2021, among other things, GWG disclosed that several enumerated factors raised substantial doubt regarding its ability to continue as a going concern.
Despite these disclosures, in recommending the purchase of L Bonds to certain retail customers, Moloney failed to exercise reasonable diligence, care, and skill to understand the potential risks, rewards, and costs associated with the recommendations. Moloney also recommended the purchase of L Bonds to certain retail customers for whom it did not have a reasonable basis to believe that the recommendations were in the customers’ best interest based on the customers’ investment profiles and the potential risks, rewards, and costs associated with the L Bonds.
Moloney also failed to establish written policies and procedures reasonably designed to identify and disclose, mitigate, or eliminate conflicts of interest associated with recommendations and enforce those policies and procedures that it did have and to disclose material conflicts of interest associated with its recommendations of L Bonds created by its Chief Executive Officer’s and other employees’ personal ownership of GWG securities.
Moloney further failed to establish, maintain, and enforce written policies and procedures reasonably designed to achieve compliance with Regulation BI. As a result, Moloney failed to comply with Regulation BI’s Care Obligation, Conflict of Interest Obligation, Disclosure Obligation, and Compliance Obligation.
Victims purchasing GWG Holdings Class L Bonds should contact a lawyer to determine their rights and obligations.
The Guiliano Law Group, P.C.
For more than thirty years, our practice is limited to the representation of investors. We accept representation on a contingent fee basis, meaning there is no cost to you unless we make a recovery for you. There is never any charge for a consultation or a confidential evaluation of your claim. For more information, contact us at (877) SEC-ATTY.
If you believe that you have been the victim of misconduct or fraud, contact us for a free consultation. We handle all cases on a contingency fee basis meaning that there is no cost or obligation, unless we are able to make a recovery for you.
