Erez Law is investigating claims regarding Arque Capital, Ltd. (CRD #121192, Scottsdale, AZ) and sales of GWG Renewable Secured Debentures. Arque Capital recently submitted an AWC in which the firm was censured and fined $50,000. See FINRA Case #2012033994701.
FINRA found that Arque Capital sold a total of approximately $3.53 million in an alternative investment known as GWG Renewable Secured Debentures to approximately 40 investors while providing investors with the company’s sales kit, which included a brochure with misleading statements. FINRA found that as the managing broker-dealer for the debentures, Arque Capital was responsible for, among other things, conducting due diligence on the company and the debentures, and reviewing all advertising pieces related to the debentures. FINRA further found that Arque Capital distributed sales literature that contained misleading statements, omitted material facts and failed to provide a sound basis for evaluating the securities that were being offered. In entering into the AWC, Arque Capital neither admitted nor denied FINRA’s findings.
GWG Holdings, Inc., purchases life insurance policies on the secondary market at a discount to the face value of the policies. GWG then pays the policy premiums until the death of the insured, at which point it collects the face value of the policy. GWG intends to earn returns by collecting more upon the maturity of the policy than what it has paid out to purchase and maintain the policy. FINRA found that GWG had a limited operating history, was not yet profitable, and purchased most of the policies it owns with borrowed funds. In 2012, GWG began selling what it called Renewable Secured Debentures. The Debentures were speculative, high risk investments, in which investors could lost their entire investment, according to FINRA’s findings.
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