Wendy Che, of San Mateo, California a stockbroker associated with Emerson Equity LLC is the subject of an investment related, customer initiated FINRA Securities Arbitration claim seeking $200,000 in damages. FINRA Arbitration No 25-02732.
According to FINRA Public Disclosure, it is alleged that Che acted negligently, breached her fiduciary duties, violated FINRA rules, failed to uphold her obligations under Regulation Best Interest, in violation of state and federal law. FINRA Public Disclosure does not disclose the securities involved other than were “corporate debt.” GWG Holdings Class L Bonds are corporate debt.
GWG Holdings, Inc. is a Delaware corporation headquartered in Minnesota, which through its subsidiaries, purchases life insurance policies on the secondary market at a discount to the face value of the policies. Once GWG purchases a policy, it has the obligation to keep the policy in effect by paying the policy premiums until the insured passes away. Upon the insured’s death, GWG collects the face value of the insurance benefit. The objective of this business is to earn returns by collecting more money upon the insured’s death than the amount that GWG pays to purchase, finance, and service the policies.
However, investment professionals either knew, or should have known that:
a) GWG had a very limited operating history;
b) GWG Class L Bonds were not rated by any bond rating agency;
c) GWG purchased almost all of the policies it owns with funds borrowed from financial institutions or investors.
d) GWG had a history of losses and insufficient cash flows to fund its operations. For the year ended December 31, 2019, GWG posted negative operating cash flow of $142.8 million.
e) there was no trading market for the GWG bonds and investors cannot access their principal prior to maturity absent death, bankruptcy, or total disability;
f) the GWG bonds were not directly secured by life insurance policies;
g) the underlying life insurance policies were not collateral for obligations under the GWG bonds. Instead, those policies have been separately pledged to a bank as collateral for the line of credit used by GWG to purchase the policies; and that
h) the GWG bonds were “illiquid, speculative, investments that involve a high degree of risk-including the risk of losing the entire investment.”
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.
