The L Bonds themselves are, for practical purposes, worth a small fraction of what investors paid, and what remains flows slowly through GWG's bankruptcy. But the bonds are not the recovery path. For most investors, the real path is a FINRA arbitration claim against the brokerage firm that sold the bonds, and the deadlines on those claims are closing progressively right now.
GWG Holdings sold L Bonds, high-commission, high-yield bonds backed largely by life insurance assets, through a network of brokerage firms, marketing them widely to retirees as income investments. The company stopped making payments to bondholders in early 2022 and filed for Chapter 11 bankruptcy in April 2022, with roughly $1.6 billion of L Bonds outstanding held by tens of thousands of investors, according to its bankruptcy filings. Investors' positions were converted into interests in a wind-down trust, and distributions from that process have been slow and small relative to what was invested.
So the honest answer to the question investors search: the bonds will not be repaid as promised, the bankruptcy will return only a fraction over time, and waiting for the trust is not a recovery strategy.
The brokerage firms that sold them. L Bonds were speculative, illiquid, high-commission products, and their own offering documents said they were suitable only for investors who could bear substantial risk. Firms that recommended them to retirees, to conservative investors, or in concentrated amounts had obligations under the suitability rules and Regulation Best Interest that the recommendation itself may have violated, and firms had an independent duty to investigate the product before offering it. Those claims proceed in FINRA arbitration against the selling firm, which, unlike GWG, is still standing and able to pay. Many such claims have already been brought by investors nationwide. The firm's GWG L Bond practice, in depth
FINRA's eligibility rule, Rule 12206, generally requires arbitration claims to be filed within six years of the occurrence or event giving rise to the claim. For many GWG investors, the relevant events, the recommendation and the purchase, happened between 2016 and 2021, which means six-year windows measured from those purchases have already begun expiring and continue to close, purchase date by purchase date. Separate statutes of limitation can be shorter still. Where the clock starts in a particular case is itself a contested legal question, and there are arguments that later events matter, but no investor should plan on winning that argument instead of filing on time. How the six-year rule works
The practical rule: if you bought L Bonds and have not had your claim evaluated, the safe assumption is that your deadline is nearer than you think, and possibly this year.
Investors who bought L Bonds through a brokerage firm and have not yet brought a claim, including through accounts of a deceased spouse or parent (estates and heirs can pursue these claims), and including investors who already received small distributions from the bankruptcy, which do not waive arbitration claims against the selling firm. The evaluation looks at when you bought, what you were told, your investor profile at the time, and how concentrated the position was. What the arbitration process looks like, step by step
Close to it as tradable investments. GWG filed for bankruptcy in April 2022, payments stopped, and bondholders' recovery through the wind-down process is expected to be a fraction of what was invested, paid slowly. The meaningful recovery path for most investors is a FINRA arbitration claim against the brokerage firm that recommended the bonds.
Many investors can, through FINRA arbitration against the selling firm, but the window is closing. FINRA's six-year eligibility rule generally runs from the events giving rise to the claim, and for purchases made between 2016 and 2021 those windows are expiring progressively now. A prompt evaluation is the only way to know where your specific deadline falls.
No. Receiving distributions from the GWG wind-down trust does not waive claims against the brokerage firm that sold you the bonds. The bankruptcy addresses what is left of GWG; the arbitration claim addresses the conduct of the firm that recommended the investment.
Nothing. The consultation is free and confidential, in English or Spanish, and representation is on contingency: no recovery, no fee.
About the author: Jorge L. Riera is a securities arbitration attorney and former SEC Senior Enforcement Counsel. He has represented GWG L Bond investors in FINRA arbitration.
If you or a family member bought GWG L Bonds, find out where your deadline falls before it passes. The consultation is free, confidential, and available in English or Spanish. No recovery, no fee.
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