Arete Wealth Hit With $280K in Second GWG L Bonds Arbitration Award

In August 2025, a FINRA arbitration panel ordered Arete Wealth Management, LLC to pay $280,000 in compensatory damages to an investor who purchased GWG L Bonds. The panel denied claims against individual brokers named in the case and also denied Arete’s counterclaim. The award represents another recovery for investors through FINRA arbitration after the collapse of GWG Holdings.

GWG Holdings and “L Bonds”: Background

GWG Holdings raised more than $1.6 billion by selling “L Bonds” to retail investors across the country. The bonds were marketed as income-producing and secured by life insurance policies, with interest rates typically ranging from 5.5% to 8.5% depending on maturity. They were generally issued in 2-, 3-, 5-, or 7-year terms. Unless investors provided notice before maturity, the GWG L Bonds automatically renewed into new ones.

The bonds were high-risk, complex, illiquid, and unrated. There was no resale market if investors needed access to their money. More than half of all outstanding L Bonds were rolled into new ones at maturity, leaving many retirees and conservative investors locked into a product they could not exit.

After redirecting much of its capital to Beneficient Company Group, L.P., an affiliated entity, GWG Holdings came under regulatory scrutiny. Authorities raised red flags about its accounting and the marketing of its L Bonds. In October 2020, the SEC issued subpoenas tied to these concerns, which eventually encompassed the sales practices of the broker-dealers distributing the bonds.

In 2021, GWG’s auditor resigned. In January 2022, GWG missed a $3.25 million interest payment. By April 2022, the company filed for Chapter 11 bankruptcy. The Wind Down Trust now projects distributions of only 2–3% of principal invested, leaving bondholders with devastating losses.

The Arbitration Panel’s Findings

The investor alleged negligence, misrepresentation, fraud, breach of fiduciary duty, violation of California securities laws, unsuitability, failure to supervise, breach of contract, violation of Regulation Best Interest, and related claims. The claims stemmed from the sale of three GWG L Bonds totaling $350,000.

The panel found Arete Wealth Management liable for compensatory damages but denied punitive damages, rescission, and attorneys’ fees. It also denied claims against the individual brokers named in the case. Arete’s counterclaim for promissory estoppel was likewise denied.

• Suitability (FINRA Rule 2111): Brokers must have a reasonable basis to believe an investment fits a client’s financial situation, objectives, and risk tolerance. GWG L Bonds often failed this test, especially when sold to conservative investors.
• Supervision (FINRA Rule 3110): Firms must supervise their brokers’ recommendations and sales. Panels regularly scrutinize firms that fail to monitor sales of complex and illiquid products.
• California Corporations Code: California securities laws give investors powerful remedies in FINRA arbitration. In this case, the investor sought statutory damages under § 25401 and 25403, rescissionary damages where applicable, and reasonable attorneys’ fees under § 25401 and 25501. These provisions make California law a valuable tool for investors pursuing unsuitable investment claims. Learn more about Securities Violations.

The Award to the Harmed Investor

The arbitration panel awarded the investor:

• $280,000 in compensatory damages

The panel denied attorneys’ fees, punitive damages, and rescission. It also denied all claims against the individual respondents and Arete’s counterclaim.

Why This Second Award Matters

For investors, this award reinforces that even without punitive damages or attorneys’ fees, arbitration can deliver meaningful recoveries. The panel’s decision underscores that brokerage firms remain liable for unsuitable recommendations and supervisory failures tied to GWG L Bonds.

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

Read about the earlier case in our Arete Wealth $75K Award post.

Even though GWG filed for bankruptcy, given the trustee’s projection that bondholders may recover only 2–3% of principal invested, investors can still pursue claims against the brokerage firms that sold the bonds. Arbitration panels have awarded compensatory damages, interest, and costs in multiple 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 also one example of the risks associated with Alternative Investments, which are often complex and unsuitable for retail investors.

Key Takeaway for Investors

Awards like this show that brokerage firms can be held liable for unsuitable GWG L Bond sales, even when punitive damages or attorneys’ fees are denied. Investors are still recovering meaningful compensatory damages through FINRA arbitration. Combined with an earlier award against Arete, this case underscores that panels continue to scrutinize GWG sales and provide investors a viable path to recovery.

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.