Erez Law is investigating claims regarding Michael John Wurdinger (CRD #4926912, St. Louis, Missouri), also known as Mike Wurdinger. Wurdinger recently entered into a Letter of Acceptance, Waiver, and Consent (“AWC”) in which he was suspended from association with any FINRA member in any principal capacity for six months and required to requalify by examination before acting in any principal capacity after the suspension. See FINRA Case #2012034936001. The suspension is in effect from June 16, 2014, through December 15, 2014.
FINRA found that from approximately February 2012 through February 2013, Wurdinger was a registered principal and Operations Manager at Center Street’s headquarters in Nashville, Tennessee. FINRA also found that during this time period Wurdinger failed to adequately supervise sales of GWG Renewable Secured Debentures, an illiquid and high-risk alternative investment.
GWG Holdings, Inc., purchases life insurance policies on the secondary market at a discount to the face value of the policies. GWG then pays the policy premiums until the death of the insured, at which point it collects the face value of the policy. GWG intends to earn returns by collecting more upon the maturity of the policy than what it has paid out to purchase and maintain the policy. FINRA found that GWG had a limited operating history, was not yet profitable, and purchased most of the policies it owns with borrowed funds. In 2012, GWG began selling what it called Renewable Secured Debentures. The Debentures were speculative, high risk investments, in which investors could lost their entire investment, according to FINRA’s findings.
FINRA found that Wurdinger failed to address numerous red flags indicating debenture transactions that he approved were unsuitable or may have involved misrepresentations to customers. FINRA also found that Wurdinger’s review and approval of the sales was limited to checking that the forms submitted with the transaction were entirely filled out, and thus, Wurdinger failed to supervise debenture sales totaling more than $4.3 million to customers in a manner reasonably designed to achieve compliance with the suitability requirements of FINRA and NASD rules.
FINRA further found that Wurdinger was the primary supervisory principal responsible for reviewing and approving debenture sales by his member firm’s registered representatives, and that he had no prior supervisory experience reviewing securities transactions for suitability. Wurdinger failed to understand the unique features and risks of the debentures, and he lacked a basic understanding of the requirements of suitability or principal review, according to FINRA’s findings.
In addition, FINRA found that notwithstanding the red flags, Wurdinger failed to take reasonable steps to ensure the debenture sales were suitable or had been accurately represented to customers. In approving debenture purchases, Wurdinger failed to consider whether those purchases were consistent with, among other things, the customer’s investment objectives, risk tolerances, financial conditions, ages or liquidity needs. Wurdinger also failed to consider whether representations that had been made regarding the debentures were accurate, according to FINRA’s findings. In entering into the AWC, Wurdinger neither admitted nor denied FINRA’s findings.
If you invested in GWG Renewable Secured Debentures or were a client of Wurdinger or Center Street Securities, Inc., who has suffered investment losses or financial irregularities, please contact Erez Law to explore your legal options. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies. To learn more, please call us at 888-840-1571 or complete our “contact form.”