Financial Advisor Garrett Moretz subject of SEC Complaint Regarding GWG

• August 20, 2024
• Lifemark Securities Corp

Garrett Wayne Moretz (CRD#:4086791) is a registered broker and investment advisor with Lifemark Securities Corp., in Mooresville, NC.

Broker’s History

He entered the securities industry in 2000 and previously worked with IDS Life Insurance Company; American Express Financial Advisors, Inc.; Synergy Investment Group, LLC; Allegient Securities LLC; Allegient Asset Management LLC; First Heartland Capital, Inc.; and First Heartland Consultants, Inc.

Current and Past Allegations of Conduct Leading to Investment Loss

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in July of 2024, the United States Securities and Exchange Commission (SEC) initiated a complaint against Garrett Moretz alleging, “Moretz deceived multiple retail investors by making repeated misrepresentations to them regarding high-risk debt securities known as L Bonds, which were issued by GWG Holdings, Inc. (“GWG”). Moretz, in both electronic mail messages and oral communications, repeatedly misrepresented L Bonds to investors as “guaranteed.” Moretz knew the L Bonds he offered and sold to investors were not guaranteed, and he knew they were not guaranteed at the time he represented them as such to investors. Since at least 2017, Moretz misrepresented L Bonds to investors and potential investors as “guaranteed.” From at least September 2019 until in or about August 2020, Moretz misrepresented L Bonds as “guaranteed” to four customers who subsequently purchased L Bonds. Through his conduct, Moretz violated, and unless restrained will continue to violate, Section 17(a) of the Securities Act of 1933 (“Securities Act”) and Section 10(b) of the Securities Exchange Act of 1934 (“Exchange Act”) and Rule 10b-5 thereunder.” The complaint is still pending.

In addition, Garret Moretz has four other disclosures:
• April 2024—“ Allegations pertain to an investment in an alternative product, intended to be a small component of a larger diversified portfolio. Investments were purchased from 09/2017. Unfortunately, the company that issued the investment has since filed Chapter 11 bankruptcy. Additionally, client claims the representative failed to notify Claimant that an illiquid REIT he owned became public, causing losses when the price declined. As a result, allegations include breach of fiduciary duty, negligence, breach of contract, and misrepresentation. LifeMark believes these to be suitable and appropriate transactions given the information available at the time of the transaction, concerning the investment product as well as the client’s financials, risk tolerance and objectives as represented by the client.” The damage amount requested is $50,000 and the customer dispute is still pending.
• October 2023—“ Allegations of an unsuitable investment in an alternative product, intended to be a small component of a larger diversified portfolio. Client purchased the alternative product in November of 2017. Unfortunately, the company that sold the investment has since filed Chapter 11 bankruptcy. Clients allege unsuitable investment recommendations based upon insufficient due diligence, breach of fiduciary duty, negligence, and material misrepresentation and omissions of material facts.” The customer dispute settled for $35,000.
• October 2022—“ Allegations of an unsuitable investment in an alternative product, intended to be a small component of a larger diversified portfolio. Clients purchased the alternative product between January of 2018 to October of 2020. Unfortunately, the company that sold the investment has since filed Chapter 11 bankruptcy. Clients allege unsuitable investment recommendations based upon insufficient due diligence, material misrepresentation and omissions of material facts. “ The customer dispute settled for $119,750.
• July 2022—“ Allegations pertain to an investment in an alternative product, intended to be a small component of a larger diversified portfolio. The investment was made between 2/2020 and 1/2021. Unfortunately, the company that issued the investment has since filed Chapter 11 bankruptcy. As a result, the clients are alleging breach of fiduciary duty, violations of Regulation Best Interest, violation of FINRA rules 2010, 2120, 2111.05(a), 3110, negligence, negligent supervision, breach of contract and vicarious liability.” The damage amount requested was $154,500 and the customer dispute settled for $100,000.

For a copy of Garrett Moretz’s FINRA BrokerCheck, click here.

GWG Holdings (GWGH) formally defaulted on its obligation to L bondholders on February 14, 2022. Red flags were raised among investors after the company notified them that no interest or dividend payments would be made in January 2022, nor would maturity or redemption requests be honored, making the L bonds virtually worthless. On April 20, 2022, the Dallas company, which made a name for itself through life insurance bond sales, filed for bankruptcy protection after financing arrangements could not be made. This is a disasterous outcome for unsecured stock and bond holders as all income payments have ceased and the opportunity for principal recovery appears unlikely.

Retail investors in these privately issued, high-interest L bonds purchased more than $1B worth of them through more than 100 broker-dealers. But these alternative securities were created as high-risk, speculative investments–not typically suitable for low-risk tolerance investors who count on the liquidity of their securities. GWG Holdings bought life insurance policies through secondary sales using money raised by L bond sales; when the life insurance policies paid out, those funds repaid investors.

We Help Investors Recover Investment Losses

Financial advisors have a legal and regulatory obligation to recommend only suitable investments that are appropriate for their clients’ needs and objectives. Their employing brokerage firm has a legal and regulatory obligation to supervise the Financial Advisors’ sales practices and dealings with clients. To the extent any of these duties are breached, the customer may be entitled to a recovery of his or her investment losses.

Reasonable basis suitability requires that a recommended investment or investment strategy be suitable or appropriate for at least some investors. Reasonable basis suitability requires an advisor to conduct adequate due diligence so that he or she can determine the risks and rewards of the investment or investment strategy.

Quantitative suitability requires a brokerage firm or financial advisor with actual or de facto control over a customer’s account to have a reasonable basis for believing that a series of recommended transactions – even if suitable when viewed in isolation – is not excessive and unsuitable for the customer when taken together in light of the customer’s investment profile. No single test defines excessive activity, but factors such as the turnover rate, the cost-equity ratio, and the use of in-and-out trading in a customer’s account may provide a basis for a finding that a member or associated person has violated the quantitative suitability obligation.

Customer-specific suitability requires that a member or associated person have a reasonable basis to believe that the recommendation is suitable for a particular customer based on that customer’s investment profile. Among the criteria that a financial advisor must evaluate to satisfy his or her customer-specific suitability obligations include the investor’s age, tax status, time horizon, liquidity needs, and risk tolerance; a client’s other investments, financial situation and needs, investment objectives, and any other information disclosed by the customer should also be considered.

The Wolper Law Firm represents investors nationwide in securities litigation and arbitration on a contingency fee basis. Matt Wolper, the Managing Principal of the Wolper Law Firm, is a trial lawyer who has handled hundreds of securities cases during his career involving a wide range of products, strategies and securities. Prior to representing investors, he was a partner with a national law firm, where he represented some of the largest banks and brokerage firms in the world in securities matters. We can be reached at (800) 931-8452 or by email at mwolper@wolperlawfirm.com.