Stock Broker Sanctioned for Sale of GWG Debentures to Retirees

Stock Broker Sanctioned for Sale of GWG Debentures to Retirees

Stock Broker Sanctioned for Sale of GWG Debentures to Retirees 150 150 Robert Rex, Esq.

February 29, 2016- Phoenix, AZ

The Financial Industry Regulatory Authority (FINRA) barred Phoenix based broker David Joseph Escarcega for making unsuitable recommendations involving debentures to customers, many of whom were elderly.  In addition he was fined over $52,000.  See Disciplinary Proceeding 2012034936005.

The debentures included GWG Debentures. The prospectus for the GWG Debentures contains 30 separate risks including the following:

  • GWG had a limited operating history and had never made a profit. In 2009 and 2010, it had combined losses exceeding $5 million. The May 2012 Prospectus disclosed that GWG had a net loss of over $2.8 million for the year ending December 31, 2011.
  • Because GWG relied primarily on debt to finance its operations, an inability to continue to borrow could affect its business .
  • The Debentures are illiquid so investors would be unable to quickly re-sell their Debentures in the event they needed access to principal.
  • Changes in actuarial assumptions concerning the life expectancy of insureds could affect GWG’s cash flow and its ability to service payments on the Debentures.
  • Holders of Debentures likely could not recover their principal in the event of a default because the Debentures are subordinate to all other senior debt GWG has incurred.

According to FINRA records, Escarcega was last registered with Center Street Securities since 3/2010.

If you have losses on GWG debentures contact us to discuss how you may be entitled to recover damages.

Rex Securities Law , with offices in Boca Raton, FL,  and  Austin, TX,   provides representation to  investors  nationwide who are seeking recovery of investment losses due to the negligence or fraud of stockbrokers and broker dealers. If you have questions about how your account has been handled, call to speak with an experienced securities attorney.

Most cases handled on a contingent fee basis meaning that you do not pay legal fees unless we are successful.

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