GWG Holdings is a financial services holding company that provides alternative asset markets and related services. The company also engages in the secondary market business of life insurance. In addition to providing financial and risk management services, GWG Holdings operates in two segments: Investment in Beneficients and Secondary Life Insurance. In this article, we will examine the company’s business model.
Investors should be aware of the risks associated with the L Bonds, which are illiquid and untraded investments from GWG Holdings.
In addition, they are not subject to the same regulatory oversight as publicly traded investments, so investors are left with little or no insight into the value of their investment. Additionally, investors are not required to invest in L Bonds until they have a sufficient understanding of their risks and rewards.
In general, GWG Holdings L Bonds are unsuitable for retail investors since they are speculative. This is due primarily to the fact that they are callable, which means that GWG Holdings can call a customer’s L Bond at any time without penalty. This means that investors are at high risk of losing money in this investment.
The financial services firm GWG Holdings Inc. has filed for bankruptcy protection under Chapter 11 in the U.S. Bankruptcy Court for the Southern District of Texas. The company had sold about $1.6 billion in life insurance bonds via its independent broker-dealer network. However, the company has been struggling with its operations in recent months, missing multiple deadlines for its audited financial statements. The company also failed to make all of the principal and interest payments on its L Bonds series, and in January, it defaulted on those bonds.
While GWG is under Chapter 11, the company has several creditors. The SEC is currently investigating the company’s ability to file its annual report for fiscal year 2021. The company has resigned the accounting firm Grant Thornton LLP, which has been responsible for GWG’s financial affairs since 2015. The company has also been investigated by the SEC’s Enforcement Division.
GWG Holdings is in trouble. It has filed for bankruptcy protection. Investors are likely to receive a small portion of their principal investment back, and it will take years to complete the restructuring process. But the Sabes brothers are hoping to cash in on the company’s changes.
In the past, GWG held life insurance policies and sold them to investors. The investors would receive payouts when the policyholder died. Eventually, GWG Holdings changed its business model and began selling L Bonds to raise capital. Its fourth offering sold $453 million of L Bonds to retail investors. The bonds carried interest rates of 5.50% to 8.50%.
Earlier in the year, Heppner had changed the company’s business model and had been investing in start-up companies created by company executives. However, he changed the company’s business model because it was struggling to sell products. He claims he informed investors of the change and explained its reasons for the change.
GWG Holdings has admitted to filing a series of misleading and inaccurate reports with the SEC. The company failed to disclose certain risks related to L Bonds, putting many investors at risk of losing a large percentage of their principal. The company is currently pursuing monetary damages from those investors who lost money.
The company has filed for Chapter 11 bankruptcy protection along with its subsidiaries. The company has accumulated a $200 million debt by 2020, according to the bankruptcy petition. The company employed 140 broker-dealers and sold life-settlement-backed bonds, or L Bonds. These bonds are not tradable on stock exchanges and most financial advisors say they’re not suitable for retail investors.
The company has suspended its bond sales in April 2021. In the meantime, it submitted two accounting questions to the SEC’s Office of the Chief Accountant. The company expected these questions to take three to six weeks to resolve. Once the company had completed the consultation process, it expected to be able to issue financial statements. However, the SEC received the questions in July, causing the company to miss several deadlines and lose access to capital markets.