Alan Mark Mason Sanctioned for GWG Class L Bonds Sales
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Unsuitable Investment Recommendations: GWG Class L Bonds
The Financial Industry Regulatory Authority (FINRA) recently took disciplinary action against Alan Mark Mason of Westpark Capital for recommending unsuitable investments in GWG Class L Bonds to a customer with a moderate risk tolerance. These high-risk, illiquid bonds required substantial financial resources and a very high tolerance for risk, making them unsuitable for the customer’s investment profile and objectives.
Key Points Regarding GWG Class L Bonds
FINRA highlighted several key points about these bonds in its action against Mason:
- GWG had a history of net losses and insufficient cash flows for operations.
- The L Bonds involved a high degree of risk and were illiquid, with no secondary market.
- These bonds were only suitable for individuals with substantial financial resources and no need for liquidity.
Unsuitable Recommendation for Moderate Risk Tolerance
Despite the high-risk nature of the GWG Class L Bonds, Mason recommended that a customer with a moderate risk tolerance, focused on growth and income rather than speculation, invest a total of $100,000, which amounted to over 20% of her liquid net worth, in these bonds. This concentration of assets in a high-risk, illiquid investment was inconsistent with the customer’s investment profile and objectives, violating FINRA Rule 2010 and Securities Exchange Act of 1934 Rule 15l-1(a)(1).
FINRA’s Disciplinary Action and Violations
FINRA’s investigation concluded that Mason’s recommendation to invest a significant portion of the customer’s liquid net worth in the high-risk GWG Class L Bonds was not in the customer’s best interest, considering their investment profile. As a result, Mason was fined $5,000 and suspended for two months from associating with any FINRA member firm in any capacity for violating FINRA Rule 2010 and Securities Exchange Act of 1934 Rule 15l-1(a)(1).
Mason’s Checkered Past: Customer Disputes and Allegations
Alan Mark Mason’s public disclosure reveals a history of customer disputes and allegations involving unsuitable investment recommendations and unauthorized trading. In 2009, a customer alleged that Mason made unsuitable recommendations and engaged in unauthorized trading in mutual funds while associated with Gunnallen Financial Inc., resulting in a $25,000 settlement. More recently, in June 2022, a FINRA arbitration claim involving Mason’s conduct resulted in the customer receiving $33,200 in damages for alleged failure to perform due diligence and unsuitable recommendations in GWG L Bonds while associated with Westpark Capital Inc.
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Ongoing $5 Million Arbitration Claim
In addition to the disciplinary action and past customer disputes, Mason is currently facing a $5,000,000 securities arbitration claim filed on August 16, 2022. The customer alleges that Mason breached his fiduciary duties and made unsuitable investment recommendations in GWG Class L bonds during his time at Westpark Capital Inc.
Breach of Fiduciary Duty Allegations
The customer’s claim alleges that Mason breached his fiduciary duties, which require brokers and investment advisors to act in the best interests of their clients. By recommending an unsuitable investment that concentrated a significant portion of the customer’s assets in a high-risk, illiquid product, Mason allegedly violated his duty of care, duty of loyalty, and duty of disclosure.
Unsuitable GWG Class L Bonds Recommendation
The crux of the claim revolves around Mason’s recommendation of GWG Class L Bonds, which the customer alleges were unsuitable for their investment profile and objectives. By recommending a significant investment in these high-risk, illiquid bonds to a customer with a moderate risk tolerance, Mason allegedly failed to uphold his duty to make suitable recommendations aligning with the customer’s investment profile and best interests.
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