Westpark Capital Sanctioned By FINRA For Failure To Supervise GWG L Bond Sales

Investors might have sustained financial harm through WestPark Capital Inc. [CRD: 39914, Los Angeles, California], according to publicly available information found on Financial Industry Regulatory Authority BrokerCheck. WestPark Capital has been registered with FINRA since 1996 and maintains its headquarters in Los Angeles, California. Keep reading to discover more about the regulatory action involving the securities broker dealer.

FINRA Imposed Sanctions For Failure To Supervise

FINRA resolved Case No. 2021070498107 with WestPark Capital after citing weaknesses in the firm’s supervision of investment recommendations and its review of certain private offerings. Without admitting or denying the findings, WestPark Capital agreed to a censure, a $175,000 fine, and restitution of $345,073 plus interest.

Concerns Involving GWG L Bond Sales By WestPark Capital

Part of the case involved recommendations of GWG L Bonds, which FINRA characterized as risky alternative investments with limited liquidity and speculative features.

FINRA alleged that five representatives recommended these bonds to 10 retail investors from March 2019 through February 2021. According to the regulator, those purchases did not align with the investors’ stated circumstances or interests.

FINRA stated that the affected investors generally pursued moderate-risk strategies rather than speculative opportunities. Four of them were older investors. Following the recommendations, some allegedly had a significant portion of their readily available assets tied up in GWG L Bonds or similar alternative investments.

Investor Information Allegedly Not Properly Weighed

According to FINRA, WestPark Capital’s review system was not equipped to reliably detect when a proposed investment conflicted with an investor’s financial condition, goals, liquidity requirements, or tolerance for loss.

The regulator also alleged that the firm did not adequately evaluate whether individual recommendations created overly concentrated positions in risky products. In some cases, alternative investments reportedly accounted for roughly 11 percent to 75 percent of an investor’s liquid net worth.

WestPark Capital Written Procedures For Investment Recommendations Lacked Practical Guidance

FINRA found that WestPark Capital’s written policies largely described regulatory duties in general terms but did not give supervisors enough direction on how to apply them.

The procedures allegedly did not spell out how to assess product costs, investment risks, concentration levels, or repeated patterns of questionable recommendations. They also did not clearly establish when a supervisor should send a transaction for a higher level of review.

GWG later suspended L Bond sales and stopped meeting certain payment obligations in January 2022. The company entered bankruptcy proceedings in April 2022.

Private Offering Reviews Also Questioned

FINRA separately examined WestPark Capital’s due diligence on four private offerings connected to two issuers.

One offering involved an early-stage cannabis venture that had not yet generated revenue or developed an operating track record. FINRA alleged that WestPark Capital did not sufficiently test whether the company could secure necessary licenses, produce income, and support promised payments to investors.

Another issuer operated rent-to-own stores. FINRA alleged that WestPark relied on outside reports paid for by the issuer and did not independently verify key financial claims or conditions.

Red Flags Allegedly Went Unresolved

The regulator stated that WestPark Capital did not adequately investigate warning signs tied to the rent-to-own business, including substantial leverage and the issuer’s inability to repay about $30 million in earlier notes when they came due.

FINRA concluded that WestPark Capital violated FINRA Rules 3110 and 2010 and willfully violated Regulation Best Interest.

Did You Sustain Losses Involving WestPark Capital?

Did you experience investment losses involving securities broker dealer WestPark Capital Inc.? You should contact Soreide Law Group at (888) 760-6552 or online and consult with a securities attorney regarding a possible recovery of your investment losses. Soreide Law Group has recovered losses for hundreds of investors throughout the US. Also, our securities lawyers work on a contingency fee basis and advance all costs. WestPark Capital denies accusations of sales practice violations.