Girard Sharp LLP announces that it, together with its co-counsel, Malmfeldt Law Group P.C., filed a proposed class action lawsuit on February 18, 2022, seeking to represent purchasers of GWG Holdings, Inc. (Nasdaq: GWGH) L bonds directly in GWGH’s L bond offering pursuant to a June 3, 2020, registration statement. Commenced on February 18, 2022, the GWGH class action lawsuit—captioned Bayati, et al. v. GWG Holdings, Inc., et al., No. 3:22-cv-00410 (N.D. Tex.)—alleges that GWGH and certain of its directors made misrepresentations and omissions in offering materials in violation of the Securities Act of 1933.
If you suffered losses, please provide your information by filling out the form at this link, calling us toll-free at (415) 981-4800, or emailing [email protected]. Lead plaintiff motions for the GWGH class action lawsuit must be filed with the Court no later than April 25, 2022.
COMPLAINT ALLEGATIONS: Until 2018, GWGH’s business was focused on investment in life insurance policies. GWGH raised capital for the purchase of life insurance policies in the secondary market primarily through the sale of L bonds to investors through a network of securities broker-deal firms. In 2018, GWGH announced a major shift in its stated purpose: Instead of investing in life insurance policies, GWGH would invest in The Beneficient Company Group L.P., an entity founded and controlled by Defendant Brad K. Heppner, who was Chairman of GWGH’s Board of Directors from April 26, 2019 to June 14, 2021.
On or about March 30, 2020, GWGH filed with the Securities and Exchange Commission a registration statement for an L bond offering, which became effective on June 3, 2020. In August 2020, GWGH began offering and selling L bonds pursuant to the June 2020 registration statement. GWGH sold over $350 million of L bonds between August 2020 and April 2021 in connection with the June 2020 registration statement.
The GWGH class action lawsuit alleges that Defendants made material misrepresentations and omissions in the June 2020 registration statement concerning GWGH’s use of the net proceeds from the L bonds offering. Plaintiffs allege that, contrary to representations in the registration statement, L bond proceeds were neither used to increase the value of GWGH’s assets (alternative or otherwise), nor to provide an expanded set of products or services for investors, nor to increase working capital or liquidity, nor to satisfy any regulatory requirements.
By April 2021, GWGH was forced to discontinue the L bond offering as it was unable to timely file its 2020 annual report and soon faced liquidity problems. In November 2021, GWGH disclosed that it had received an SEC subpoena for documents and information relating to the offering and its accounting practices, among other areas of inquiry. GWGH further disclosed that the existence of the investigation could have a material adverse effect on “the value of [GWGH’s] securities.” In February 2022, GWGH announced that it was unable to continue making payments on L bonds and that the bonds lacked value on account of GWGH’s inability to service them.
THE LEAD PLAINTIFF SELECTION PROCESS: The Private Securities Litigation Reform Act of 1995 permits any investor who purchased GWGH’s L bonds pursuant to the June 2020 registration statement to seek appointment as lead plaintiff in the GWGH class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of that class. A lead plaintiff acts on behalf of all other class members in directing the GWGH class action lawsuit. The lead plaintiff can select a law firm of his or her choice to litigate the GWGH class action. An investor’s ability to share in any potential future recovery from the GWGH class action is not dependent upon serving as lead plaintiff.
ABOUT GIRARD SHARP LLP: Girard Sharp LLP is a national litigation firm representing plaintiffs in class and collective actions in federal and state courts, with extensive experience in prosecuting investor class actions for financial fraud. We serve individuals, institutions and business clients in cases involving securities, antitrust, consumer protection, and whistleblower laws. Our clients range from individual consumers and small businesses to Fortune 100 corporations and public pension funds. Our attorneys have recovered over a billion dollars for our clients against some of the nation’s largest corporations, such as Raymond James, Peregrine Financial Group, and Oppenheimer Funds, in cases arising from securities fraud, false advertising and other unfair business practices. Girard Sharp has been distinguished as a Tier 1 law firm for plaintiffs’ class action litigation in the “Best Law Firms” list in the survey published in U.S. News & World Report’s Money Issue. Law360 named Girard Sharp as one of its Product Liability Groups of the Year for 2021. In 2020, Girard Sharp was honored with the Daily Journal’s “Top Boutiques in California” award. The National Law Journal (NLJ) also has named Girard Sharp to its elite “Plaintiffs’ Hot List,” a selection of top U.S. plaintiffs’ firms recognized for wins in high-profile cases.
