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Introduction
GWG bonds were always impaired. GWG was able to sell impaired bonds for 10 years because its equity float was too small to be covered by Wall Street analysts, its stock was too thinly traded to short sell and third tier brokerage firms looked the other way in exchange for extraordinary sales commissions.
We have found so many red flags in GWG Holdings' public filings years before its bankruptcy filing in 2022 that no unconflicted broker would have recommended GWG's L Bonds and no fully informed investor would have bought them. Nonetheless, $1.3 billion face value of L Bonds remained outstanding at the time of the bankruptcy. These bonds were sold by third tier brokerage firms in pursuit of undisclosed commissions as high as 8%.
