Why are brokerage firms responsible if GWG went bankrupt?
Because brokers had a duty to recommend only suitable investments and to disclose risks. Misrepresentations and unsuitable sales violated FINRA rules and securities laws. Brokerage firms can still be held liable even if GWG itself is bankrupt.
What are GWG L Bonds?
High-yield bonds sold by GWG Holdings and marketed as safe, income-producing investments. In reality, they were complex, illiquid, and unsuitable for many retail investors.
What FINRA rules support investor recovery?
Rule 3110 addresses supervision. But investor claims often hinge on Rule 2111 (Suitability) and Rule 2010 (Commercial Honor). If a firm’s failure to supervise led to violations of these rules, and you suffered losses, recovery may be possible.
Does a firm need to know about the misconduct to be held liable?
No. Under FINRA rules, firms are responsible for establishing systems to prevent and detect misconduct. Ignorance is not a defense.
What types of misconduct result from poor supervision?
Common violations include excessive trading, unsuitable recommendations, selling away, and misappropriation of funds.
Can I sue a firm for failing to supervise my broker?
Yes, you can file a FINRA arbitration claim. If your losses stem from misconduct the firm failed to detect or stop, you could have a strong case for recovery.
What is failure to supervise under FINRA rules?
Failure to supervise refers to a firm’s violation of FINRA Rule 3110, which requires active oversight of brokers. This includes monitoring trades, responding to red flags, and enforcing compliance procedures.
