Defective Securities

Can my broker or investment advisor sell me cryptocurrency (“crypto”)? Is it an investment? The answer is not so simple; no, they cannot sell it directly, but they may try to sell it to you indirectly through a fund or private placement. Rest assured, it is still just as volatile and not appropriate for most investors. Malecki Law is looking into the sale of crypto-based products, as they have been on the rise. Although investors might be intrigued and ecstatic to get into the new shiny investment on the street, it is still a high-risk bet, no matter what your investment professional may say.

Investing in something new can be enticing, but it does not necessarily mean that it is in your best interest as an investor. If you were sold crypto-based products and sustained substantial losses, you need a Crypto-Based Investment law firm in New York, like Malecki Law, to review your potential claim.

What is crypto? Digital assets are the umbrella which crypto falls under. There is a wider range of assets that land under the digital assets umbrella, such as non-fungible tokens (“NFTs”). The common denominator of the variety of digital assets is that they tend to use blockchain technology. Crypto consists of a broad range of virtual currencies, such as Bitcoin (BTC) or Ethereum (ETH).

Today, very few products use asbestos, an abundant and inexpensively produced heat-resistant mineral once common in a wide array of construction materials, auto parts, and firefighter equipment, to name a few. Its use was rampant until studies revealed that asbestos causes various forms of cancer—clearly a defective product, use of asbestos is now scarce and regulated by the government.

Defective securities products are no different. Brokerage firms often develop complex securities products that promise to beat the market but instead result in catastrophic financial losses to investors. If this sounds familiar to you, you need to contact a New York Defective Securities Law Firm, like Malecki Law. Touted as the next big thing since sliced bread, some defective securities are so complex that even the brokers who sell them do not understand how the product works. Some other such products are easier to understand, but their viability is misrepresented, or their attendant risks are downplayed. The GWG Holdings L Bond is of the latter kind.

A few years ago, GWG Holdings Inc. created what they called the L bond, a speculative, unrated, high-risk, and high-yield investment instrument. GWG issued the bond to raise funds to purchase life insurance policies from insureds with the intention to collect the policies’ payouts upon their deaths. Each L Bond was priced at $1,000 principal with a minimum buy-in of 25 units ($25,000) and offered to investors with varying maturity terms and corresponding interest rate incomes. Given the investment’s high risk and price tag, the L Bond was deemed suitable only for wealthy investors. Nevertheless, brokers fraudulently sold it to the elderly, retirees, and other relatively inexperienced people with conservative to moderate risk tolerances and limited resources. If your broker sold you high-risk investments and failed to disclose or explain their inherent risks, you should have an experienced Defective Securities Lawyer in New York, like the lawyers at Malecki Law, review your portfolio. Based on the foregoing, it is clear this story does not have a happy ending; but before getting there, a word on the L Bond’s defective nature is apropos.

Articles Posted in Defective Securities

Can My Broker or Investment Advisor Sell Me Cryptocurrency?

What Does a Defective Securities Product Look Like? Example: GWG Holdings L Bond