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In June 2025, a FINRA arbitration panel ordered Lifemark Securities Corp. to pay $75,000 in compensatory damages to an elderly investor who purchased GWG L Bonds. The panel also awarded 8% annual interest from April 2024 until paid in full, $14,035 in expert witness fees, and $300 in filing costs. The award represents another recovery for investors through FINRA arbitration following the collapse of GWG Holdings.
What Are GWG L Bonds? Understanding the Investment and Its Risks
Between 2012 and 2021, GWG Holdings raised more than $1.6 billion by selling high-yield “L Bonds” to individual investors. These bonds were described as being backed by life insurance portfolios and offering interest rates from 5.5% to 8.5% depending on term length. Unless the investor declined renewal, the bonds automatically rolled into new ones at maturity.
Despite these promises, the L Bonds were complex, speculative, and highly illiquid. There was no active resale market, and GWG retained the right to call the bonds at any time without cost. Many investors were unaware of the risk level and became trapped in repeat renewals of the same investment.
As GWG Holdings shifted its operations to its related company, Beneficient Company Group, L.P., regulators began questioning its financial reporting and L Bond sales. The U.S. Securities and Exchange Commission issued subpoenas in October 2020 to investigate these issues, later focusing on the conduct of broker-dealers who had marketed and sold the L Bonds to investors.
Trouble mounted for GWG Holdings in 2021 when its independent auditor stepped down. Soon after, the company failed to make a $3.25 million interest payment in January 2022 — a clear sign of liquidity problems. By April 2022, GWG filed for Chapter 11 bankruptcy. According to recent projections, the Wind Down Trust expects distributions to total only 2–3% of principal, leaving investors facing near-total losses.
What Were the Panel Findings?
The investor alleged breach of fiduciary duty, negligence, gross negligence, negligent misrepresentation, negligent supervision, breach of contract, fraud, violations of federal securities law, including SEC Rule 10b-5, and violations of the North Carolina Securities Act.
In an important rebuke to an argument often made by opposing counsel in FINRA arbitration claims, the panel rejected the respondents’ argument that unsuitable investment advice given more than six years before the filing of the Statement of Claim barred the claims under FINRA’s eligibility rule, Rule 12206.
The panel found Lifemark Securities Corp. liable. In its reasoning, the panel highlighted that the investor was elderly, unsophisticated, and had applied for a conservative investment strategy. Despite this, the broker recommended illiquid, risky securities that added to his quantity of similar illiquid investments. The panel concluded this was unsuitable given the investor’s circumstances and that he would be unlikely to recoup the funds through employment.
The panel denied punitive damages and treble damages, as well as attorneys’ fees, but noted that the claimant could pursue fees in a court of competent jurisdiction.
FINRA Arbitration Award
The arbitration panel awarded the investor:
- $75,000 in compensatory damages
- 8% annual interest from April 25, 2024, until paid in full
- $14,035 in expert witness fees
- $300 in filing costs
The panel denied attorneys’ fees, punitive damages, and treble damages.
Retirees and older investors were especially vulnerable to unsuitable sales pitches that downplayed risks and overstated safety. Panels continue to recognize that these sales were unsuitable and that brokerage firms can be held liable for failing to supervise their brokers.
Why This Award Matters – Investor Update 2025
This award highlights a recurring theme in GWG cases: elderly and conservative investors were recommended speculative, illiquid L Bonds that did not match their investment profiles. Retirees and older investors were especially vulnerable to unsuitable sales pitches that downplayed risks and overstated safety. Panels continue to recognize that these sales were unsuitable and that brokerage firms can be held liable for failing to supervise their brokers.
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 on 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.
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. Investors are recovering damages, interest, and costs through arbitration.
FINRA arbitration claims often involve:
- 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, especially for retirees.
- Supervision (FINRA Rule 3110): Firms must supervise their brokers’ recommendations and sales. Panels have consistently held firms responsible when supervisors fail to prevent unsuitable recommendations. In opposing dismissal under FINRA’s eligibility rule, the investor argued the claims were timely because state law and FINRA rules measure the period from when the violation could reasonably have been discovered, and supervisory failures continued until the investment was liquidated in 2022.
- Commercial Honor (FINRA Rule 2010): FINRA requires members to uphold high standards of commercial honor and just and equitable principles of trade.
Choose an Experienced FINRA Arbitration Lawyer For Your GWG L Bond Losses
If you invested in GWG L Bonds 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.
Securities claims are time-sensitive. Harmed investors are encouraged to act quickly and contact Altamirano PLLC to speak with an experienced securities arbitration lawyer.
