Does Your Broker Have Insurance for LBond Losses?

In a recent article from InvestmentNews.com, it was reported that Emerson Equity, a California broker/dealer, is suing a network of insurance underwriters in a $5 million dispute over insurance claims by investors who bought GWG L bonds that were issued by GWG Holding Inc., which filed for Chapter 11 bankruptcy in April. Emerson Equity was the leading seller of GWG bonds.

Last month, Emerson Equity first filed its complaint alleging breach of contract against a network of insurance carriers, which included, according to the article, “certain underwriters at Lloyd’s London.” Emerson Equity refiled the lawsuit on Oct. 13 in the U.S. District Court in San Francisco. According to the Emerson Equity lawsuit, the policy in question has a limit of $5 million of liability coverage.

GWG Holdings Inc. sold approximately $1.6 billion in bonds which were backed by life settlements through broker/dealers.  According to the InvestmentNews article, Emerson Equity reported a total revenue of $107 million and net income of $9.4 million in 2021 which was more than double their total revenue and net income from the year before, according to its filing with the SEC.

Broker/dealers often carry errors and omissions coverage as a defense against potential investor lawsuits and damages related to trading errors and other mistakes. When the insurance carriers deny coverage, this often ends in disputes between broker/dealers and insurance carriers.

GWG L Bonds carried significant risks to investors.  They were definitely not suitable for all investors, particularly retirees or those investors with moderate to conservative portfolios.  GWG Holdings stated in their prospectus that: "Investing in our L Bonds may be considered speculative and involves a high degree of risk, including the risk of losing your entire investment." Soreide Law Group, has filed many claims against various brokerage firms who sold GWG Investments. Investors should pursue all avenues to attempt to recover their GWG L Bond losses.

Soreide Law Group encourages any investors in the GWG L bonds who purchased the bonds through the recommendations of their broker/dealers and sustained financial losses, to file their lawsuits before the insurance claims filed by the broker/dealers run out.  Broker/dealers are now filing insurance claims to cover the GWG L bond losses.

If you’ve experienced losses due to the actions or recommendations of Emerson Equity or any other broker/dealer or financial advisor who may have sold you high-risk GWG L Bonds, contact Soreide Law Group and speak to an experienced securities lawyer regarding the possible recovery of your investment losses through a FINRA arbitration at:  888-760-6552.

Soreide Law Group represents our clients nationwide before FINRA, and we work for you on a contingency fee basis, no fee if no recovery.