GWG Renewable Secured Debentures Helped Lead to Suspension of Michael Wurdinger
GWG Renewable Secured Debentures, an illiquid and high-risk alternative investment, played a large role in the sanctions levied against Michael John Wurdinger by the Financial Industry Regulatory Authority (“FINRA”). Wurdinger, formerly associated with Center Street Securities, Inc., was suspended by FINRA relating to allegations that he failed to supervise sales of GWG Renewed Secure Debentures.
The Peiffer Rosca securities practice attorneys Alan Rosca and Joe Peiffer are investigating the GWG Renewable Secured Debentures on behalf of investors.
GWG Holdings, Inc. Sells GWG Renewable Secured Debentures
GWG Holdings, Inc. began selling what it called Renewable Secured Debentures in 2012. GWG purchases life insurance policies on the secondary market at a discount to the face value of the policies. Once GWG purchases a policy, it pays the policy premiums until the insured dies. GWG hopes to earn returns by collecting more upon the maturity of the policies than it has paid to purchase, finance and service the policies. The company has a limited operating history and it not yet profitable, according to FINRA. GWG has purchased almost all of the policies that it owns with funds borrowed from financial institutions or investors, according to FINRA.
GWG requires a minimum investment in the GWG Renewable Secured Debentures of $25,000 and an additional investment can be made in $1,000 increments, according to FINRA. The debentures have varying maturity terms and interest rates, from six-month debentures offering an annual interest rate of 4.75% to seven-year debentures offering 9.50%, according to FINRA.
GWG Holdings’ Life Insurance Policies Were Not Collateral for Debentures
The prospectus for the debentures states that the life insurance policies held by GWG are not collateral for obligations under the debentures. Instead, those policies have been separately pledged collateral for a line of credit used by GWG to purchase life insurance policies, according to FINRA.
Investments in the debentures are illiquid as investors do not have to access their principal prior to maturity unless the request is due to death, bankruptcy or total disability, according to FINRA. If GWG decides to prepay the debentures other than under those circumstances, a prepayment fee of 6% is charged, according to FINRA. There is also no trading market for the debentures, according to FINRA.
Michael Wurdinger Suspended Relating to Sales of GWG Renewable Secured Debentures
Wurdinger was responsible for reviewing and approving debenture sales by Center Street’s registered representatives during the period when GWG Renewable Secured Debentures were sold to investors, according to FINRA. Wurdinger is accused of approving the sales of debentures containing red flags indicating possible misrepresentations and unsuitable sales, according to FINRA. Wurdinger approved the purchases of debentures purchased by customers, including elderly customers and retirees, whose investment objectives and risk tolerances were inconsistent with the speculative nature of the debentures, according to FINRA. Wurdinger also approved excessively concentrated debenture purchases that constituted a high level of a customer’s total investable assets or net worth, according to FINRA.
Wurdinger consented to being suspended from serving in a principal capacity in the securities industry for six months without denying or admitting FINRA’s findings.
The Peiffer Rosca securities attorneys often represent investors who lose money as a result of Ponzi schemes, investment fraud, or stockbroker misconduct. They are currently investigating the possibility of assisting victims with the recovery of their losses. They take most cases of this type on a contingency fee basis and advance the case costs, and only get paid for their fees and costs out of money they recover for their clients.
Investors who believe they lost money as a result of investment fraud or misconduct may contact the securities lawyers at Peiffer Rosca, Alan Rosca or Joe Peiffer, for a free, no-obligation evaluation of their recovery options, at 888-998-0520.