Investors Suffer Huge Losses In GWG Holding (GWGH)

Investigations into securities fraud, financial reporting issues, and trading activity have commenced.

GWG Holdings, Inc. (Nasdaq: GWGH) claims to be an innovative financial services firm based in Dallas that is a leader in providing liquidity solutions that are non-correlated to the traded markets, and unique services for the owners of illiquid investments.

GWG Holdings finances its portfolio of life insurance assets through the sale of alternative investment products, according to its website. Although these products are touted as offering potentially higher yields than other investment assets that are correlated with the traditional stock and bond markets, they may come at a much greater risk to investors.

GWG Financial Problems

GWG Holding’s stock price rose to $10.55 in 2021. As disclosed in the Company’s periodic reports filed with the SEC, the Company relies to on L Bond sales to provide liquidity. However, in 2021 the Company voluntarily suspended its L Bond sales during eight months in 2021 due to the late filing of its Annual Report on Form 10-K for the year ended December 31, 2020. Apparently the Company and its auditors were having difficulty resolving accounting issues with the Annual Report.  The Company resumed L Bond sales following the filing of 10-K on November 5, 2021, months after it was due, but experienced significantly lower sales than expected.

GWG also announced that it was going to be late with its 2021 because of the refusal of its auditors to remain. Late filings of financial statements and 10Ks is a significant event for a public company and would likely result in a voluntary suspension of the sale of L Bonds. 

GWG Announces Missed Interest Payments

Then on January 18, 2022,  the Company announced that due to the decreased sales of its L Bonds, GWG did not make the January 15, 2022 interest payment of approximately $10.35 million and principal payments of approximately $3.25 million with respect to its L Bonds. The Company stated that if it fails make the payments in the next 30 days it will result in default, according to the filing. 

GWG Stock Declines Over 50%

The price of the Company’s shares have fallen from $9.90 a share to $4.02 a share in January of this year, closing at $4.02 a share on January 26, 2022.

Investigations and Arbitrations 

These events have caused many investors to question whether the brokerage firms who recommended the share for investment performed adequate due diligence on the company before making the recommendations and the accuracy of the financial statements published by the GWG.

Further analysis of the trading in the stock shows a suspicious decline in the price of the stock in the days leading up to the January 18 announcement, and huge volume on the 28th.

More Information Regarding GWG Lawsuits

For more information regarding the investigations and arbitrations which are being filed, call Sallah Astarita & Cox, at 212-509-6544