Kyle Chapman Suspended over GWG L Bond Sale
Kyle Chapman (CRD# 6303483), formerly a broker registered with American Trust, unsuitably recommended a GWG L Bond investment, according to a recent enforcement action. MDF Law is investigating the Henderson, Nevada-based Foundations Investment Advisors representative for similar conduct. If you have concerns about investments in your accounts, call us to speak with a lawyer.
More information about the allegations against Mr. Chapman follows below. This post is sourced from his BrokerCheck profile, a Financial Industry Regulatory Authority record reviewed on October 15, 2024.
Sanction Alleges Misrepresentations, Unsuitability
A Letter of Acceptance, Waiver, and Consent (No. 2020068655901) published on September 5, 2024 describes FINRA’s disciplinary action against Mr. Chapman. As it alleges, he unsuitably recommended that a customer invest $50,000 in a GWG L Bond. This product was “a speculative, unrated debt security,” according to the sanction. When he recommended the investment, he allegedly did not have a reasonable basis to do so. Furthermore, FINRA found, his recommendations of the L Bond “were neither in the customer’s best interest nor suitable, in light of the customer’s investment profile.” Mr. Chapman also allegedly “made negligent misrepresentations and omissions” relating to the recommendations when responding to the customer’s inquiries.
As a result of these findings, FINRA suspended him from associating with any member firm for three months. It also ordered him to pay a fine of $5,000 and $1,471 in disgorgement.
Attorney Presentation on GWG L Bonds
What Are GWG L Bonds?
As FINRA observes, GWG L Bonds were issued by GWG Holdings, which until 2019 bought life insurance policies on the secondary market. That year, it “reoriented its business” to focus on “providing liquidity to holders of illiquid investments and alternative assets.” To fund its business, the company sold L Bonds, investments that were neither secured nor rated. The company’s own disclosures for these products described them as speculative, illiquid investments with a high risk level, which were “only suitable for persons with substantial financial resources and with no need for liquidity.”
In 2022, the company defaulted on its obligations to investors in the bonds, stopped selling them, and filed for bankruptcy. In light of these facts and others, FINRA concluded that the products were unsuitable for Mr. Chapman’s customer. As it notes, the client had a moderately aggressive risk profile and non-speculative investment goals.
FINRA: Adviser Based in Henderson, Nevada
Kyle Chapman launched his career as a broker in 2014. That year, he registered with SagePoint Financial’s office in Newport Beach, California. Over the course of his career, he’s held tenures at firms like Cetera Advisors and WestPark Capital. He joined American Trust Investment Services’ office in San Clemente, California in 2020, remaining there until 2022. While suspended from acting as a broker, he is an investment adviser with Foundations Investment’s office in Henderson, Nevada.
Kyle Chapman Complaints? Call MDF Law Today
If you suffered losses investing in GWG L Bonds or other risky products recommended by Kyle Chapman, you may have recovery options. The investment fraud attorneys at MDF Law have proven experience defending the rights of investors, including those who lost money in unsuitable products. We take cases on contingency, meaning we only receive a fee when our clients recover losses. Call 800-767-8040 today for a free, confidential consultation with our team.