Securities Lawyers Blog
FINRA’s Latest Action on GWG L-Bonds Confirms What Investors Have Been Saying for Years
FINRA’s recent enforcement action involving the sale of GWG L-Bonds to elderly investors underscores a systemic problem that has directly harmed thousands of families who were steered into these speculative, illiquid products. The case—where an advisor concentrated an 81-year-old client’s account in GWG bonds—illustrates the same failures we continue to see in our GWG investigations.
As I told InvestmentNews:
“A firm should not let an 80-year-old client buy 90% of any product, let alone GWG. Any amount of reasonable due diligence at the time would have shown that GWG was unsuitable.”
That statement reflects the core issue: the recommendations never should have happened.
The Problem Was Never the Market — It Was the Recommendation
GWG L-Bonds were complex, high-risk, and fundamentally inappropriate for the type of investors who were routinely sold these products. The L-Bonds were tied to an opaque business model, relied on constant new fundraising to pay earlier obligations, and carried substantial liquidity and valuation risks.
For years, brokers marketed these bonds as safe, income-producing vehicles, downplaying or ignoring:
The lack of liquidity
The speculative nature of GWG’s business model
The company’s growing financial instability
The real risk of principal loss
When the company collapsed into bankruptcy, those risks became unavoidable reality.
What FINRA’s Latest Action Shows
FINRA’s charges reinforce several key points:
Suitability failures were widespread.
Advisors had no basis to place retirees—especially those with limited income and savings—into high-risk, illiquid products.
Supervision at many firms was inadequate.
Firms were required to perform due diligence and monitor concentrations but often failed to detect or act on blatant red flags.
The harm to older investors was predictable and preventable.
GWG’s structure and filings made clear that these were not appropriate for anyone needing liquidity, principal protection, or stable income.
Regulatory findings align with what many GWG investors experienced firsthand.
FINRA’s action validates what countless families have been saying for years: These bonds were sold when they never should have been recommended.
Why This Matters for GWG Investors Today
GWG investors often ask whether there is anything that can still be done after bankruptcy. The answer is yes.
The bankruptcy process determines what investors recover from GWG itself—but it does not address wrongdoing in the sale and recommendation of the bonds. That responsibility lies with the brokerage firms and advisors who recommended the product without adequate due diligence or regard for suitability.
FINRA arbitration remains a powerful avenue for recovery because:
It focuses on the conduct of the advisor and the firm
It evaluates whether the recommendation was appropriate for the individual investor
It allows recovery of losses even when the issuer is bankrupt
It provides a faster and more streamlined process than civil court
For many GWG investors—particularly seniors, retirees, and conservative savers—these claims may represent their only meaningful path to recovery.
If You Are a GWG L-Bond Investor, You Are Not Alone
The pattern exposed in FINRA’s recent action mirrors what we see repeatedly in our investigations:
high concentrations, unsuitable recommendations, inadequate supervision, and investors left with staggering losses.
Investors deserve answers, accountability, and the opportunity to recover what was wrongfully lost.
If you or a family member purchased GWG L-Bonds, you should understand your rights and review whether the recommendation was suitable given your age, income, risk tolerance, and need for liquidity.