SEC Initiates Civil Complaint against Robert Vance Involving Sale of GWG Bonds

• October 21, 2024
• Moloney Securities Co.

Robert Morgan Vance (CRD#: 1887560) was a previously registered broker and investment advisor.

Broker’s History

He entered the securities industry in 1988 and previously worked with DreamWest Securities Corporation (FINRA expelled the firm in 1994); IDS Life Insurance Company; American Express Financial Advisors, Inc.; SunAmerica Securities, Inc.; Macken Securities, Inc.; World Choice Securities, Inc.; BFT Financial Group, LLC; Ridgeway & Conger, Inc.; and Moloney Securities Co., Inc.

Allegations of Misconduct

According to publicly available records released by the Financial Industry Regulatory Authority (FINRA), in September 2024, Plaintiff United States Securities and Exchange Commission, for its Complaint against defendant Robert M. Vance, alleges in its complaint that this matter concerns recommendations by Vance that certain retail customers purchase high risk, illiquid debt securities known as L Bonds. From approximately June 30, 2020, through approximately January 15, 2022, these recommendations violated Rule 15l-1(a) under the Securities Exchange Act of 1934 (Regulation Best Interest or Reg BI). L Bonds were unrated corporate bonds offered by GWG Holdings, Inc. (GWG). According to GWG’s disclosures during the Relevant Period, (a) L Bond investments involved a high degree of risk, including the risk of losing an investor’s entire investment; (b) L Bond investments may be considered speculative; (c) L Bond investments were only suitable for investors with substantial financial resources and no need for liquidity in the investment; and (d) GWG would use a portion of the L Bond proceeds to repay existing L Bond holders. In addition, in November 2021, GWG disclosed, among other things, that several enumerated factors raised substantial doubt regarding its ability to continue as a going concern. Despite these disclosures, in recommending the purchase of L Bonds to retail customers, Vance failed to exercise reasonable diligence, care, and skill to understand the potential risks, rewards, and costs associated with the recommendations. Vance also recommended the purchase of L Bonds to at least four retail customers for whom he did not have a reasonable basis to believe the recommendations were in the customers’ best interest based on the customers’ investment profiles and the potential risks, rewards, and costs associated with the L Bonds. During the Relevant Period, at least 50 of Vance’s retail customers purchased a total of approximately $4.3 million in L Bonds upon Vance’s recommendations. Many of these customers were at or near retirement age and had moderate risk tolerance. There is a reasonable likelihood that Vance will, unless enjoined, continue to engage in transactions, acts, practices, and courses of business of similar purport and object to those set forth in this complaint. The SEC therefore seeks a judgment against Vance providing permanent injunctive relief; disgorgement of ill-gotten gains; imposing civil monetary penalties; as well as other appropriate and necessary relief.

In addition, Robert Vance has been the subject of eighteen other FINRA Disclosures:

• June 2024—“ Suitability/negligence. 2017-2021.” The damage amount requested is $100,000.00 and the customer dispute is still pending.
• March 2024—“ Suitability/negligence. 2020-2021.” The customer dispute is still pending.
• October 2023—“ Suitability/negligence. 2014-2018.” The damage amount requested is $1,000,000.00 and the customer dispute is still pending.
• October 2023—“ Suitability/negligence. 2014-2018.” The damage amount requested is $500,000 and the customer dispute is still pending.
• October 2023—“ Suitability/negligence. 2013-2018.” The damage amount requested is $500,000 and the customer dispute is sill pending.
• August 2023—“ Suitability/negligence. 2017-2019.” The customer dispute settled for $65,000.00.
• June 2023—“ Suitability/negligence. 2018.” The customer dispute settled for $23,250.00.
• June 2023—“ Suitability/negligence. 2018-2020.” The damage amount requested is $76,000.00 and the customer dispute is still pending.
• June 2023—“ Suitability/negligence. 2018-2020.” The customer dispute settled for $15,500.00.
• May 2023—“ Suitability/negligence. 2017-2020.” The damage amount requested was $110,450.00 and the customer dispute settled for $63,978.53.
• May 2023— “Investigating potential rule violations of Regulation Best Interest.” Initiated by UNITED STATES SECURITIES AND EXCHANGE COMMISSION.
• April 2023—“ Suitability/negligence. 2017.” The customer dispute settled for $40,950.64.
• December 2022—“ Suitability/Negligence. 2018.” The customer dispute settled for $30,000.00
• November 2022—“ Suitability/Negligence. 2021.” The customer dispute settled for $65,000.00
• October 2022—“ Suitability/Negligence.” The customer dispute settled for $37,500.00
• June 2022—“ Suitability/Negligence. 2016-2018.” The customer dispute settled for $125,000.00
• May 2022—“ Negligence/Suitability.” The customer dispute settled for $30,000.00.
• March 2022—“ Investment performance (2018-Present).” The customer dispute was denied.

For a copy of Robert Vance’s FINRA BrokerCheck, click here.

Wolper Law Firm Is Investigating GWG Holdings Claims

 

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 disastrous outcome for unsecured stock and bond holders as all income payments have ceased and the opportunity for principal recovery appears unlikely.

GWG HOLDINGS’ L BONDS–WHAT YOU NEED TO KNOW

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.