10.0David P Neuman
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Jonathan Greenfield and GWG Renewable Secured Debentures

Have you invested in GWG Renewable Secured Debentures?  We have previously written numerous blog entries regarding actions bought by the Financial Industry Regulatory Authority (FINRA) against financial advisors and brokerage firms who recommended that their clients invest in GWG debentures, because FINRA believes that these investments are speculative, illiquid, and not suitable for some investors.

FINRA recently brought at least its eighth disciplinary action in the last several months against a financial advisor or firm for recommending GWG Debentures to their clients.  FINRA recently filed a regulatory complaint against Jonathan J. Greenfield, a financial advisor from Woodland Hills, California.  Jonathan Greenfield, who previously worked with Arete Wealth Management from March 2010 to December 2013, was alleged to have recommended GWG Renewable Secured Debentures to a number of clients and also alleged to have made misrepresentations and omissions in connection with these recommendations.  FINRA alleges that Greenfield misrepresented the risks of GWG Debentures by saying that they were “safe investments”, that they had “no fluctuation in principal”, and that these representations were false.  In connection with this investigation, FINRA seeks to sanction Jonathan Greenfield for this conduct.  Greenfield has not been in the securities industry since December 2013.

GWG Holdings, Inc. purchases life insurance policies on the secondary market, at a discount from the policy owner.  GWG then hopes to make a profit by collecting the face value of the policy when the insured passes away.  However, in order to finance the purchases of these insurance policies, GWG borrows money from financial institutions or investors.

GWG began issuing Renewable Secured Debentures in 2012 to sell to investors.  The GWG Renewable Secured Debentures have varying maturities, from six-months to seven-years, and are purported to pay annual interest rates from 4.75% to 9.50%.  However, the GWG Renewable Secured Debentures are illiquid, and investors do not have access to their principal investment, with exceptions for death, bankruptcy, or total disability of the investor.  There is no secondary market for the GWG Renewable Secured Debentures either.  The prospectus for the GWG Debentures states that this investment is generally not suitable for an investor who needs their invested funds to be liquid.

FINRA previously suspended Michael Wurdinger of Center Street, who was responsible for supervising the financial advisors who recommended the GWG Renewable Secured Debentures to Center Street Securities clients.  FINRA alleged that Wurdinger did not understand the features and risks of the GWG Debentures, and therefore he lacked the requisite understanding to adequately supervise and review the sales of these Debentures.  FINRA also alleged that Wurdinger approved sales of the GWG Debentures to many elderly clients, some of whom had investment objectives and risk tolerances that were inconsistent with the GWG Debentures, which were speculative.  FINRA further alleged that some Center Street Securities customers had high concentrations of these debentures, which exceeded suitability requirements described in the GWG Debenture disclosure documents.

FINRA also suspended another advisor at Center Street Securities for selling GWG Debentures.  Additionally, FINRA has also suspended advisors from 79 Capital Securities, Freedom Investors Corp., and Arque Capital Ltd.

We are investigating whether clients may have potential claims against Arete Wealth Management, Center Street Securities, 79 Capital Securities, Freedom Investors Corp., Arque Capital, Allied Beacon Partners, or other broker-dealer firms for unsuitable sales and misrepresentations in connection with the sale of the GWG Renewable Secured Debentures.  Financial advisors have an obligation to make investment recommendations that are suitable for their clients, considering the client’s investment objectives, risk tolerance, financial resources, age, and other circumstances.

Securities broker-dealer firms have a responsibility to adequately supervise all representatives and financial advisors who are registered through their firm, including investments sold by their registered representatives.  Broker-dealers also must take steps to ensure that their financial advisors follow all securities rules and regulations, as well as internal firm policies, including to make sure that investments are suitable for their clients.  When broker-dealers fail to adequately supervise their registered representatives, they may be liable for investment losses sustained by customers.  If you have invested in GWG Renewable Secured Debentures and want to hear about ALL legal options, please visit https://www.israelsneuman.com/ and go to our CONTACT page or call us at 720-599-3505.

Click here to view FINRA AWC:  Greenfield FINRA AWC

Israels & Neuman, PLC is a private law firm and is not affiliated with any government or law enforcement agency. Any investigation referenced in this blog is independent in nature and is being conducted by our law firm privately, not in conjunction with any government or law enforcement agency. All information contained in this blog should be deemed statements of opinion derived from the author’s review of public records, not statements of fact. This blog is advertising material and does not create an attorney client relationship, nor does it constitute legal advice. Everyone’s situation is different and the question of whether or not you have a claim will vary on a case-by-case basis. In contingent representation, clients may still be liable for costs.
10.0David P Neuman


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