Arete Wealth Hit With $75K Award in GWG L Bonds Arbitration

In February 2024, a FINRA arbitration panel ordered Arete Wealth Management, LLC to pay $75,000 in compensatory damages plus interest to an investor who purchased GWG L Bonds through one of its brokers. The panel also assessed most of the hearing costs against Arete. While the panel denied punitive damages, treble damages, and attorneys’ fees, the case is another recovery for investors through FINRA arbitration after the collapse of GWG Holdings.

GWG L Bond Investment Scheme

GWG Holdings promoted its “L Bonds” as income-generating investments backed by life insurance policies. The company raised over $1.6 billion through these offerings, paying interest rates of 5.5%–8.5% over terms of two to seven years. Investors who didn’t give notice before maturity saw their bonds automatically renewed.

Behind the marketing, the L Bonds carried serious risks: they were complex, illiquid, and had no resale market. GWG also reserved the right to call the bonds at any time. Many investors — especially retirees — ended up in repeated renewals with no easy way to access their funds.

GWG Holdings’ shift of capital to its affiliate, Beneficient Company Group, L.P., coincided with increasing regulatory attention. Concerns emerged surrounding GWG’s accounting and the sale of its L Bond investments. The SEC issued subpoenas in October 2020, later broadening the scope of its inquiry to the broker-dealers who participated in marketing and selling the bonds.

GWG Holdings’ decline accelerated in 2021 when its accounting firm resigned amid concerns about the company’s finances. The company missed a $3.25 million interest payment in early 2022 and soon after sought Chapter 11 bankruptcy protection. The Wind Down Trust, now overseeing the liquidation process, projects that investors will recover just 2–3% of principal—a fraction of their original investment.

The Findings of the Arbitration Panel

The investor alleged that Arete Wealth Management invested their savings in GWG L Bonds, which exposed the investor to a complete loss. The claims asserted included violation of Missouri’s Securities Act § 409-5.501 et al; common law fraud; breach of contract; negligence/negligent misrepresentation/omission; unjust enrichment; and negligent supervision.

The arbitration panel found Arete Wealth Management liable and awarded compensatory damages and interest. 

The panel awarded damages, interest, and costs but denied punitive damages, treble damages, and attorneys’ fees.

The Award From the Arbitration Panel

The arbitration panel awarded the investor:

• $75,000 in compensatory damages
• 7% annual interest from the date of the award until paid in full

The panel also assessed most hearing costs against Arete Wealth Management.

Why This Award Matters – Investor Update 2025

This decision is one of multiple FINRA arbitration awards involving GWG L Bonds. Investors across the country have brought similar claims, arguing that the bonds were unsuitable and that brokerage firms failed to adequately supervise their sale.

Even though GWG filed for bankruptcy, given the news from the bankruptcy trustee projecting distributions of only 2–3% of principal invested, investors can still pursue claims against the brokerage firms that sold the bonds. Panels have awarded compensatory damages, interest, and costs in several cases, underscoring arbitration as a viable path to recovery. Read more about GWG L Bonds in our GWG L Bonds Claims page. GWG L Bonds are one example of the risks associated with Alternative Investments, which are often complex and unsuitable for retail investors. 

This award highlights how arbitration continues to deliver meaningful recoveries for GWG L Bond investors. By comparison, the Wind Down Trust estimates that if the District Court approves the settlement with GWG’s former directors and officers, cumulative distributions to bondholders will be only 2.694% to 3.446% of invested principal. That means only $2,694 to $3,446 on a $100,000 investment – a fraction of the losses investors suffered.

Key Takeaway for Investors

Awards like this show that brokerage firms can be held liable for their unsuitable sales of GWG L Bonds. Arbitration panels continue to hear claims and issue awards for investors who suffered losses.  

The claims reflected two recurring themes in GWG cases: suitability and supervision.

• Suitability (FINRA Rule 2111): Brokers must have a reasonable basis to believe an investment fits a client’s financial situation, objectives, and risk tolerance. Illiquid, high-risk securities like GWG L Bonds often failed this test. 
• Supervision: Firms must maintain systems to supervise their brokers’ recommendations and sales. Arbitration panels have consistently scrutinized supervisory failures in cases involving complex and illiquid products. 

This was the first FINRA arbitration award against Arete Wealth Management involving GWG L Bonds. 

Read about the second award in our Arete Wealth $280K Award post.

Contact Altamirano PLLC About GWG L Bond Claims Today

If you invested in GWG L Bonds through Arete Wealth Management and have losses, call Altamirano PLLC today. Our Principal, Jorge Altamirano, has handled more than 1,500 FINRA arbitration claims and continues to represent GWG investors nationwide in recovering their losses. Many investors were told these bonds were “safe” or “low-risk,” but in reality they were high-risk, complex, illiquid, and unsuitable for investors, including retirees and conservative investors. 

Call us at (212) 220-6556 to discuss your options. We handle cases on a contingency fee basis, which means you do not owe us a legal fee unless we recover for you.

Contact Jorge Altamirano, Principal of Altamirano PLLC
One World Trade Center, 85th Floor
New York, NY 10007
(212) 220-6556
[email protected] 

Securities claims are time-sensitive. Harmed investors are encouraged to act quickly and contact Altamirano PLLC to speak with an experienced securities arbitration lawyer.