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In September 2024, a FINRA arbitration panel ordered AGES Financial Services, LTD. to pay more than $1.08 million to multiple GWG L Bond investors. The recovery included compensatory damages, 10% annual interest, attorneys’ fees, costs, and emotional distress damages awarded to two investors.
GWG L Bonds: What Investors Were Told vs. Reality
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 bonds automatically renewed into new ones.
The GWG L Bonds were high-risk, complex, illiquid, and unrated. There was no resale market if investors needed access to their money and GWG retained discretion to repurchase the bonds at any time without charge or penalty. 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.
GWG later shifted large amounts of capital to Beneficient Company Group, L.P., an affiliated entity. Regulators raised concerns about the company’s accounting and bond sales practices. In October 2020, the SEC issued subpoenas over these concerns, which eventually targeted the sales practices of some of the broker-dealers that sold the L Bonds.
By 2021, GWG Holdings was facing mounting financial and regulatory strain. When its independent auditor resigned that year, confidence in the company faltered. After failing to make a $3.25 million interest payment in January 2022, GWG filed for Chapter 11 bankruptcy in April. The Wind Down Trust has warned that recoveries may amount to just 2–3% of principal, leaving many investors with significant and likely permanent losses.
What Did the Panel Find?
The investors alleged breach of fiduciary duty, suitability violations, fraud, misrepresentation, negligence, breach of contract, failure to supervise, and violations of FINRA Rules 2010, 2020, and 2111, as well as state securities and consumer-protection statutes.
The panel found AGES Financial Services liable for unsuitable sales of GWG L Bonds. For two investors, the panel also recognized emotional distress and awarded damages accordingly. The panel granted attorneys’ fees under California and Arizona securities laws.
- 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 for retirees.
- Commercial Honor (FINRA Rule 2010): FINRA requires members to adhere to high standards of commercial honor and just and equitable principles of trade.
This case is notable because the panel awarded emotional distress damages in addition to compensatory losses, an uncommon outcome in FINRA arbitration. It also shows how state Blue Sky and consumer-protection laws can support attorneys’ fees awards alongside damages.
The Awards for Harmed Investors
The panel issued separate awards to multiple investors, including:
- $267,252 in compensatory damages, plus 10% interest, $12,616 costs, and $80,176 in attorneys’ fees (California law). Learn more about how state securities statutes, including the California Corporations Code can enhance investor recovery on our Securities Violations page.
- $256,520 in compensatory damages, plus 10% interest, $12,616 in costs, $76,956 in attorneys’ fees, and $75,000 in emotional distress damages.
- $53,762 in compensatory damages, plus 10% interest, $12,616 in costs, and $18,817 in attorneys’ fees (Arizona law pursuant to A.R.S. § 44-2002).
- $149,372 in compensatory damages, plus 10% interest, $12,616 in costs, $44,812 in attorneys’ fees, and $75,000 in emotional distress damages.
In total, the panel awarded over $1,080,000 in compensatory damages, attorneys’ fees, costs, and emotional distress damages, with 10% statutory interest accruing until paid.
Why This Award Matters – Investor Update 2025
This case is notable because the panel awarded emotional distress damages in addition to compensatory losses, an uncommon outcome in FINRA arbitration. It also shows how state Blue Sky and consumer-protection laws can support attorneys’ fees awards alongside damages.
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. Panels have awarded compensatory damages, interest, attorneys’ fees, costs, and in rare cases, emotional distress damages. 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.
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, attorneys’ fees, and, in rare cases, emotional distress damages through arbitration.
The award also highlights the importance of supervision. Firms must supervise their brokers’ recommendations and sales. Panels closely scrutinize inadequate oversight of complex, illiquid products. See our page on Failure to Supervise.
Contact Altamirano PLLC About GWG L Bond Claims Today
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.
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.
