Senior executives at IFP Securities including its CEO and CCO called out GWG Holdings, which filed for bankruptcy in April after months of missing payments to clients who purchased risky GWG L Bonds resulting in massive losses for scores of investors, while simultaneously admitting that representatives at IFP wanted to increase their clients' exposure to those same problematically risky alternative investments.
A recent article reported that IFP CEO Bill Hamm admitted the high risk involved with products like GWG Holdings L Bonds could prove problematic for investors, noting that with GWG's financial status all but crashing through the floor, "part of that risk has come home to roost."
Chief Compliance Officer Keith Kessel spoke of the SEC's investigation of IFP Securities, which started in May 2021, and the SEC's scrutiny of IFP Securities' sales practices. Kessel noted other broker-dealers were also on the hook. For the record, at least 140 broker-dealers had agreements to sell GWG Holding L Bonds, and IFP is just one of them. Allied Beacon Partners, Centaurus Financial, Emerson Equity, and Newbridge Securities were previously tied to unsuitable GWG L Bond sales.
The SEC, as part of its investigation of IFP, sought to understand how IFP took steps "to evaluate the risk, features, and appropriate target market in an investment that generates income and is speculative."
The key point is that IFP Securities senior executives themselves acknowledged both that GWG Holdings L Bonds were speculative, and that IFP Securities knew L Bonds were speculative when its representatives sold the risky alt investment to retail customers.
Despite IFP Securities' attempt to address concerns about certain sales practices—such as capping concentration for alt investments at certain limits—and despite the firm portraying its policies as protective in nature—such as by taking credit for rejecting some of its representatives' requests to concentrate up to 60-70% of client portfolios in alt investments such as GWG Holdings L Bonds—the hard fact is that the firm knew these alt investments were speculative and very risky.
Based on the SEC, FINRA, and other regulators' past statements regarding speculative products and the issue of suitability, such statements from IFP Securities executives thus indicate these speculative and risky alternative investments should have never been sold to clients with lower risk tolerance preferences, for lack of suitability.
If you invested with a broker or investment adviser at IFP Securities or at any other firm that sold you GWG Holdings L Bonds, GWGH stock, or any other speculative and complex alt investment whose excessive risk or concentration exceeded your preferences, tolerance level, or investment objectives, resulting in damages when the product's risk "has come home to roost" as IFP's CEO phrased it, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.