Articles Tagged with Emerson Equity

Chicago-based Stoltmann Law Offices is investigating financial advisors who switch clients into more expensive mutual funds that trigger unnecessary fees. Brokers often like to switch clients’ assets from one mutual fund class into another. Although they pitch these “trades” as more profitable for investors, they are making more money in fees and commissions.

FINRA, the federal securities industry regulator, has settled charges with two broker-dealers “for years of poor supervision of short-term mutual fund trades.” According to Investment News, on Dec. 22, FINRA “penalized Emerson Equity $1.7 million. A week later, FINRA hit an Advisor Group broker-dealer, Triad Advisors, with $705,000 in penalties, also for poor supervision of sales of the LJM Preservation & Growth Fund, an alternative mutual fund that closed in 2018.”

Emerson ran into problems from 2015 to 2020, Investment News notes, “when the firm and its CEO and founder, Dominic Baldini, failed to put into place a variety of systems to monitor short-terms trades of mutual fund Class A and Class B shares. Such systems would have enabled the firm to comply with FINRA’s suitability rule.”

Chicago-based Stoltmann Law Offices is representing investors who’ve suffered losses from investing in GWG Holdings L-Bonds. The company stated recently that it would miss nearly $14 million in interest payments on “L” Bonds that were due on January, 15, 2022. On Monday (Feb. 14), GWG issued a statement that “We know many [investors] will have questions, and we don’t yet have all the answers, but we are committed to finding the best path forward,” according to Investment News.

In the interim, GWG isn’t paying interest on its bonds — or dividends — on its Redeemable Preferred Stock and Series 2 Redeemable Preferred Stock. L Bonds are unrated bonds that are based on life insurance settlements. They are created to purchase life insurance contracts and have yielded between 1% and 5% of the market price as broker commissions. Yet the maturity of GWG Bonds has ranged from 2 to 7 years, yielding 5.5% to 8.5%.

“A reader of GWG’s communication would gather that they had no intention of making the missed payments even within the grace period of 30 days,” noted alphabetastock.com. “This could lead some holders of the L Bonds and trustees to accelerate their bonds, which would make them due immediately, and as a result, payable, further stretching the company’s resources. There is growing concern that this acceleration could create a ‘run’ on the company that could be financially ruinous not only for GWG but its L Bondholders as well.”

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