If you invested in GWG L Bonds and suffered losses when GWG Holdings filed for bankruptcy in April 2022, you may have legal options to recover your money. Approximately 26,000 investors lost a collective $1.6 billion in these high-yield bonds that were marketed as safe, income-generating investments. At Varnavides Law, PC, our securities attorneys help investors in California, New York, and New Jersey pursue FINRA arbitration claims against the broker-dealers who recommended and sold these unsuitable investments. With the bankruptcy estate offering just 3 cents on the dollar, arbitration against your brokerage firm remains the most viable path to meaningful recovery.
Key Takeaways
- Bankruptcy recovery is minimal: The GWG bankruptcy settlement offers approximately $31.48 per $1,000 invested, leaving most investors with devastating losses.
- FINRA arbitration is your best option: Investors have won 90% of GWG L Bond arbitration cases that proceeded to hearing, with awards up to $280,000.
- Your broker may be liable: If your financial advisor recommended GWG L Bonds without properly disclosing the risks, you may recover your losses through arbitration.
- Time limits apply: FINRA arbitration claims must be filed within six years under Rule 12206. Contact a GWG L Bond lawyer promptly.
What Were GWG L Bonds?
GWG Holdings, Inc. issued L Bonds as high-yield debt securities backed by life insurance policies. The company used investor funds to purchase life insurance policies on the secondary market, with the strategy of collecting death benefits to repay investors with interest. According to SEC filings, GWG sold approximately $1.6 billion in L Bonds between 2012 and 2022 through a network of approximately 145 broker-dealers nationwide.
GWG L Bonds offered interest rates between 5.50% and 8.50% with maturity periods of 2 to 7 years. These higher-than-market returns attracted retirees and income-focused investors seeking alternatives to low-interest savings accounts and CDs. However, the attractive yields masked significant risks that many broker-dealers failed to adequately disclose to their customers.
What Brokers Told Investors
- Safe, income-generating investment
- Backed by life insurance policies
- Principal protection features
- Consistent interest payments
- Suitable for retirement accounts
What Brokers Failed to Disclose
- Non-traded, illiquid securities
- 6% redemption penalty before maturity
- No guarantee of principal return
- Complex business model risks
- GWG’s deteriorating financial condition
What Happened to GWG Holdings?
GWG Holdings filed for Chapter 11 bankruptcy on April 20, 2022, after a series of financial difficulties that left investors unable to access their money. According to FINRA Investor Alerts and court filings, the company’s collapse followed a pattern of concerning events:
| Date | Event | Impact on Investors |
|---|---|---|
| 2020 | SEC begins investigation into L Bond sales practices | Regulatory scrutiny increases |
| January 15, 2022 | GWG misses $13.6 million in interest and principal payments | Investors receive no payments |
| April 20, 2022 | GWG files Chapter 11 bankruptcy | L Bonds become worthless |
| April 29, 2022 | NASDAQ delists GWG stock | No public market for securities |
| April 2025 | DOJ and SEC file criminal charges against executives | Fraud allegations confirmed |
| March 2025 | Beneficient settlement offers 3 cents on dollar | Minimal bankruptcy recovery |
Criminal Charges Filed Against GWG Executives
In April 2025, the Department of Justice and SEC filed charges against former GWG Holdings executives, alleging they defrauded investors of approximately $43 million. According to the SEC complaint, executives misled investors about how GWG used funds and concealed conflicts of interest related to Beneficient, diverting tens of millions from GWG even as the company spiraled toward bankruptcy.
Why Pursue FINRA Arbitration for GWG L Bond Losses?
With the GWG bankruptcy offering investors approximately $31.48 per $1,000 invested before deductions, the bankruptcy process provides virtually no meaningful recovery. According to court filings from April 2025, only approximately $3 million in net assets remain for distribution among roughly 26,000 investors. This translates to about $115 per investor on average, with many receiving nothing under proportional distribution.
FINRA arbitration allows you to pursue claims directly against the brokerage firm that sold you GWG L Bonds. Unlike bankruptcy claims that compete with all creditors, arbitration claims target your specific broker-dealer for misconduct in recommending an unsuitable investment.
Bankruptcy Recovery
- Approximately 3 cents per dollar
- Long delays for distribution
- Competing with all creditors
- No individual accountability
- Limited to remaining assets
FINRA Arbitration Recovery
- 90% success rate in GWG cases
- Awards up to $280,000 obtained
- 9-18 month typical timeline
- Targets broker-dealer directly
- Full damages available
GWG L Bond FINRA Arbitration Results
Investors have achieved significant recoveries through FINRA arbitration claims against broker-dealers that sold GWG L Bonds. According to industry reports, monetary arbitration awards have been granted in 18 of 20 (90%) of FINRA arbitration cases that proceeded to trial.
Notable FINRA Arbitration Awards
| Broker-Dealer | Year | Award Amount | Case Details |
|---|---|---|---|
| Ages Financial Services | 2024 | $1.08 million | Six investors, including $75,000 emotional distress damages for two claimants |
| Arete Wealth Management | 2025 | $280,000 | Largest individual GWG L Bond award to date |
| Arete Wealth Management | 2024 | $75,000 | First award against Arete for GWG sales |
| Lifemark Securities Corp. | 2025 | $75,000 + $14,000 costs | Elderly investor with conservative objectives |
| Lifemark Securities Corp. | 2025 | $58,000 + $45,700 fees/costs | Second loss in consecutive weeks |
Emotional Distress Damages Available
In the Ages Financial Services case, FINRA arbitrators awarded $75,000 in emotional distress damages to each of two investors. According to securities law practitioners, this represents one of the largest awards for emotional distress damages in FINRA arbitration history. GWG L Bond victims, particularly retirees who lost their retirement savings, may be eligible for similar non-economic damages.
Which Broker-Dealers Sold GWG L Bonds?
GWG Holdings sold L Bonds through Emerson Equity LLC and a network of approximately 145 regional broker-dealers. According to SEC enforcement actions and industry sources, these firms received commissions ranging from 0.75% to 8% of the principal amount sold. The following broker-dealers have faced regulatory action or arbitration claims related to GWG L Bond sales:
Regulatory Enforcement
- Western International Securities
- Lifemark Securities Corp.
- Emerson Equity LLC
Arbitration Awards Against
- Arete Wealth Management
- Ages Financial Services
- Greenberg Financial
Other Selling Firms
- Centaurus Financial, Inc.
- Aegis Capital Corp.
- Newbridge Securities Corp.
- Coastal Equities
- Westpark Capital Inc.
- Moloney Securities Co.
Legal Claims Against GWG L Bond Broker-Dealers
A GWG L Bond lawyer can pursue several legal theories against the brokerage firm that recommended these securities to you:
Unsuitable Investment Recommendation
Under FINRA Rule 2111 and SEC Regulation Best Interest, broker-dealers must recommend investments that are suitable for your financial situation, investment objectives, and risk tolerance. GWG L Bonds were high-risk, illiquid, non-traded securities that were unsuitable for many of the conservative, income-oriented investors to whom they were sold.
Failure to Conduct Due Diligence
According to the SEC lawsuit against Western International Securities, the firm failed to establish any criteria for determining which customers could invest in L Bonds, despite the prospectus stating they were only suitable for customers with “substantial financial resources.” A GWG L Bond lawyer can demonstrate your broker failed to adequately investigate the investment before recommending it.
Misrepresentation and Omission
Many investors were told GWG L Bonds were “safe” or “guaranteed” investments. These representations were materially false. Brokers also frequently failed to disclose the 6% early redemption penalty, the illiquid nature of the securities, and GWG’s deteriorating financial condition. These misrepresentations and omissions form the basis for fraud claims.
Failure to Supervise
Brokerage firms have a duty under FINRA Rule 3110 to supervise their registered representatives. If your firm failed to detect or prevent improper GWG L Bond sales, it may be liable for failure to supervise.
Breach of Fiduciary Duty
Investment advisers and some broker-dealers owe fiduciary duties to their clients. Recommending unsuitable, high-commission products like GWG L Bonds over safer alternatives may constitute a breach of fiduciary duty.
SEC and FINRA Enforcement Actions
Federal regulators have taken enforcement action against broker-dealers that sold GWG L Bonds, providing strong evidence to support investor arbitration claims:
- Western International Securities (June 2022): The SEC sued Western International Securities and several brokers for approximately $13.3 million in unsuitable L Bond sales. The firm settled in July 2024.
- Lifemark Securities Corp. (2024): The SEC found Lifemark failed to comply with Regulation Best Interest when recommending GWG L Bonds. The firm agreed to disgorgement, prejudgment interest, and an $85,000 civil penalty.
- Garrett Moretz (July 2024): The SEC charged this North Carolina broker with fraudulently selling high-risk L Bonds to retail customers.
Regulatory Findings Support Your Claim
SEC and FINRA enforcement findings can be used as evidence in your arbitration claim. These regulatory determinations establish that broker-dealers failed to meet their obligations, making it easier to prove your case.
What Damages Can You Recover?
A successful GWG L Bond arbitration claim may recover the following damages:
- Principal Investment: The full amount you invested in GWG L Bonds, minus any interest payments received and bankruptcy distributions.
- Lost Opportunity Costs: The returns you would have earned if your funds had been invested appropriately according to your risk tolerance.
- Interest: Prejudgment interest on your losses from the date of investment to the date of the award.
- Emotional Distress Damages: Compensation for anxiety, stress, and grief caused by the loss, particularly for retirees dependent on their savings.
- Punitive Damages: In cases of egregious misconduct, arbitrators may award punitive damages to punish wrongdoing.
- Attorney Fees and Costs: Some arbitration awards include recovery of legal fees and expert witness costs.
The FINRA Arbitration Process for GWG Claims
Most GWG L Bond claims are resolved through FINRA arbitration rather than court litigation because brokerage account agreements typically contain mandatory arbitration clauses. According to FINRA Dispute Resolution Statistics, the arbitration process typically takes 9 to 18 months from filing to award.
| Stage | What Happens | Typical Timeline |
|---|---|---|
| Case Evaluation | Attorney reviews account statements and determines claim viability | 1-2 weeks |
| Statement of Claim | Formal complaint filed with FINRA outlining damages and legal theories | 2-4 weeks |
| Broker Response | Brokerage firm files Answer to allegations | 45 days |
| Arbitrator Selection | Both parties select arbitrators from FINRA panel | 1-2 months |
| Discovery | Exchange of documents, account records, and evidence | 3-6 months |
| Hearing | Presentation of evidence and testimony before arbitrators | 1-3 days |
| Award | Arbitrators issue binding decision | 30 days after hearing |
Why Choose a GWG L Bond Lawyer?
GWG L Bond cases require specialized knowledge of securities law, FINRA arbitration procedures, and the specific issues surrounding these failed investments. An experienced GWG L Bond lawyer provides:
- Product Knowledge: Understanding how L Bonds worked, why they failed, and how to demonstrate unsuitability.
- Regulatory Framework: Knowledge of FINRA rules, SEC regulations, and Regulation Best Interest requirements.
- Evidence Gathering: Ability to obtain account statements, broker communications, and due diligence files through discovery.
- Expert Resources: Access to securities experts who can testify about industry standards and damages calculations.
- Arbitration Experience: Track record of presenting cases before FINRA arbitration panels and negotiating settlements.
Who Should Contact a GWG L Bond Lawyer?
You should consult with a GWG L Bond lawyer if any of the following apply to your situation:
Investment Circumstances
- You invested in GWG L Bonds
- Your broker recommended these as safe or suitable
- You were not told about the illiquidity risks
- A significant portion of your portfolio was in L Bonds
- You held L Bonds in a retirement account
Investor Profile
- Conservative or moderate risk tolerance
- Retiree or near retirement
- Needed income from investments
- Limited investment experience
- Relied on broker recommendations
Frequently Asked Questions About GWG L Bond Claims
What is the deadline to file a GWG L Bond claim?
Under FINRA Rule 12206, arbitration claims must be filed within six years from the event giving rise to the dispute. For GWG L Bonds, this typically means six years from when you purchased the bonds or when you should have discovered the fraud. Given that GWG filed bankruptcy in April 2022, investors should act promptly to preserve their claims.
Can I still file a claim if I already filed a bankruptcy proof of claim?
Yes. FINRA arbitration claims against your broker-dealer are separate from bankruptcy claims against GWG Holdings. You can pursue both simultaneously. In fact, the minimal recovery expected from bankruptcy makes arbitration claims against selling broker-dealers essential for meaningful recovery.
What if my broker is no longer with the same firm?
You can pursue claims against both the individual broker and the brokerage firm that employed them at the time of the sale. Brokerage firms are responsible for supervising their representatives and may be held liable even if the broker has since left.
How much does it cost to hire a GWG L Bond lawyer?
Most GWG L Bond lawyers work on a contingency fee basis, meaning you pay no attorney fees unless you recover compensation. The fee percentage is discussed during your free consultation. Case costs such as filing fees and expert witnesses may be advanced by your attorney and recovered as part of any award or settlement.
What evidence do I need for my GWG L Bond claim?
Important documents include your brokerage account statements, GWG L Bond purchase confirmations, account opening documents, and any communications with your broker about the investment. Your attorney can obtain additional documents through the FINRA discovery process.
How long does a GWG L Bond arbitration take?
According to FINRA statistics, the average case duration is 12-18 months. However, many GWG L Bond cases settle before hearing once the evidence of unsuitable recommendations is established. Cases involving multiple claimants or complex issues may take longer.
What if I signed paperwork acknowledging the risks?
Signing risk disclosures does not prevent you from pursuing a claim. If your broker failed to explain those risks, made contradictory verbal representations about safety, or recommended the investment despite your unsuitable profile, you may still have valid claims. Brokers cannot hide behind fine print to justify unsuitable recommendations.
Is FINRA arbitration better than waiting for the bankruptcy settlement?
For most investors, yes. The GWG bankruptcy is expected to return approximately 3 cents per dollar invested. FINRA arbitration claims against broker-dealers have resulted in full or substantial recovery for many investors, with a 90% success rate in cases that proceed to hearing.
Recover Your GWG L Bond Losses
If you lost money investing in GWG L Bonds, Varnavides Law, PC can evaluate your case and pursue compensation through FINRA arbitration. Attorney Gary Varnavides spent over 10 years at Sichenzia Ross Ference LLP defending broker-dealers in securities cases, giving him unique insight into how brokerage firms assess risk and defend against investor claims. Named a Super Lawyers Rising Star from 2015 to 2023, Gary now uses that experience to advocate for defrauded investors in California, New York, and New Jersey.
