According to FINRA’s allegations, former financial advisor Jonathan
Greenfield made various false and misleading statements to customers regarding
GWG Renewable Secured Debentures.
The Financial Industry Regulatory Authority (FINRA) filed an order issuing
a disciplinary proceeding against Jonathan Jay Greenfield (CRD# 2591266)
in December 2014. Greenfield submitted an Offer of Settlement to FINRA,
which FINRA accepted on November 12, 2015. Without admitting or denying FINRA’s allegations,
Greenfield consented to FINRA’s entry of findings, violations, and
Greenfield became associated with Arete Wealth Management in March 2010.
Arete terminated Greenfield’s registration with the firm on December
6, 2013. According to FINRA, from March 2012 until October 2012, Greenfield
“recklessly and at times intentionally made material misrepresentations
and omissions” to firm customers. Specifically, these alleged misrepresentations
and omissions involved the details of GWG Renewable Secured Debentures.
What are GWG Renewable Secured Debentures?
GWG Holdings, Inc. is a corporation that purchases life insurance policies
at a discount of face value. The policies that GWG purchases are kept
by the corporation and premiums paid on the policies until the insured
individual dies. Once the insured individual passes away, GWG gets whatever
the face value of the insurance benefit is. GWG’s business model
then is to make money by collecting more money upon death than it paid
to purchase, finance, and service the policy.
GWG began selling Renewable Secured Debentures in 2012. These investments
are complex, illiquid, not directly secured by life insurance policies,
and overall incredibly risky. This type of investment is also automatically
renewed unless the investor provides written notice otherwise.
Greenfield’s Alleged Misrepresentation and Omissions
According to FINRA, Greenfield emailed between 50 and 75 of his customers
inviting them to a dinner where he would give a sales pitch regarding
GWG Debentures. FINRA evaluated these emails, and stated that the representations
Greenfield made in them to his customers were “materially false
and misleading.” Greenfield allegedly referred to the Debentures
as “very good,” “safe,” and involved “no
fluctuation in principal” on various occasions. Greenfield also
allegedly made misleading statements regarding the Debentures in a brochure
he distributed to 12 customers.
According to FINRA, Greenfield’s alleged misconduct was a failure
to observe high standards of commercial honor and just and equitable principles
of trade. Greenfield consented to FINRA’s sanction of a bar from
the securities industry.