National investment fraud lawyer KlaymanToskes is currently representing GWG L Bond investors as GWG and its network of selling broker-dealers are facing SEC investigations.
Created in 1972, the SEC’s enforcement staff conducts investigations into possible violations of the federal securities laws and prosecutes the Commission’s civil suits in the federal courts as well as its administrative proceedings.
According to the SEC’s Agency Financial Report, an “integral” part of the Enforcement Division’s function is seeking penalties and the disgorgement of ill-gotten gains. The SEC seeks these measures in order to return funds to harmed investors.
The SEC is highly effective at obtaining relief in their claims. For instance, in the fiscal year 2021, the Commission obtained relief on one or more claims in 96% of its enforcement actions.
According to GWG’s regulatory filings, the Company received a subpoena to produce documents from the Chicago office of the SEC’s Division of Enforcement in October 2020. The subpoena informed the Company of the existence of a non-public, fact-finding investigation into GWG Holdings.
The October 2020 subpoena turned out to be the first of several subpoenas sent by the SEC. The requested information from the SEC is primarily related to GWG Holdings’ investment products, including its L Bonds. The SEC also requested information on accounting matters such as:
In an April 2020 court filing in the GWG Bankruptcy, GWG’s Chief Financial Officer, Timothy Evans, appears to blame the SEC for reduced L bond sales, low liquidity, and interest and principal payment defaults.
For instance, sometime in 2021, when GWG restarted its L Bond sales, the SEC issued subpoenas and document requests to individual broker firms that were selling or considering to sell GWG bonds. Following the document requests, from December 2021 to January 10, 2022, L bond sales were “dramatically lower than anticipated.” As a result, GWG did not have sufficient funds to cover an interest payment of $10.35 million and principal payments of $3.25 million due on January 15, 2022.
KlaymanToskes is a leading national securities law firm practicing exclusively in the field of securities arbitration on behalf of retail and institutional investors throughout the world in large and complex securities matters. KlaymanToskes has recovered more than $230 million for investors in FINRA arbitrations. KlaymanToskes has office locations in California, Florida, New York, and Puerto Rico. Contact today for a free consultation.