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.
How GWGH’s struggles will ultimately impact L Bond holders and other holders of securities of the company is unknown, but according to its filings with the Securities and Exchange Commission (“SEC”), GWGH has halted the sale of the L Bonds and failed to issue $10.35 million of interest payments and $3.25 million of principal payments to L Bond investors by the January 15, 2022 due date. GWGH L Bonds are high-yield life insurance bonds used to finance the purchase of life insurance on the secondary market. Any type of investment in the secondary life insurance market is an extremely risky investment. GWGH also has outstanding shares of common stock and preferred stock, in addition to L Bonds.
GWGH has previously announced that on October 6, 2020, GWCH received a subpoena to produce documents from the Chicago office of the SEC’s Division of Enforcement, as part of a non-public, fact-finding investigation into GWG Holdings. Since the initial subpoena, the Company has reportedly received subsequent subpoenas from the SEC for additional information. According to publicly available information in GWCH’s SEC filings, the requested information from the SEC has primarily related to GWG Holdings’ investment products, including its L Bonds, as well as various accounting matters.
Investors who wish to discuss a possible claim involving GWGH securities may contact a securities arbitration lawyer at Law Office of Christopher J. Gray, P.C. at (866) 966-9598 or via email at newcases@investorlawyers.net for a no-cost, confidential consultation. Attorneys at the firm are admitted in New York, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).
This article is intended as ATTORNEY ADVERTISING and is not an official announcement.