FINRA orders WestPark Capital to pay $345,073 in restitution over GWG L Bond sales to moderate-risk customers

If a WestPark Capital representative put you into GWG L Bonds even though you described yourself as a moderate-risk investor, FINRA has now weighed in on how those sales were supervised. In a Letter of Acceptance, Waiver and Consent (AWC) accepted on June 18, 2026, WestPark Capital, Inc. (CRD# 39914), a Los Angeles brokerage firm, was censured, fined $175,000, ordered to pay $345,073 in restitution plus interest, and required to certify that it fixed the problems FINRA identified. According to the AWC, the firm consented to findings that it willfully violated Regulation Best Interest without admitting or denying them.

BrokerCheck records show that WestPark’s firm report lists 15 regulatory events and two arbitration awards. The June 2026 AWC is the third FINRA disciplinary action against the firm since November 2021.

What FINRA found about WestPark’s GWG L Bond sales

The AWC case number is 2021070498107. According to the AWC, “Between March 2019 and February 2021, WestPark failed to reasonably supervise recommendations by five registered representatives to ten retail customers to purchase L Bonds, where the recommendations were not in the best interests of or suitable for the customers.”

The AWC states that “All ten customers had moderate risk tolerances and investment objectives that did not include speculation. Four of the customers were seniors.” FINRA also found that, because of these recommendations, “between approximately 11% and 75% of the customers’ liquid net worth became invested in alternative investments, whether in GWG L Bonds alone or in combination with other alternative investments.”

For at least one customer, alternative investments, including L Bonds, reached about 75% of liquid net worth. That customer’s investment objectives, like those of all ten, did not include speculation.

The AWC places the failure in the firm’s supervision, not only in the individual sales. According to FINRA, “The firm’s written procedures generally recited the requirements of Reg BI and FINRA Rule 2111, but they did not include procedures for conducting reviews to comply with those requirements.” The AWC also states that “In practice, WestPark did not have a reasonable process for assessing whether its representatives were developing and making recommendations that were suitable or in the best interest of its customers.”

The AWC notes that “Six of the ten customers commenced and settled arbitration proceedings against the firm. WestPark is paying restitution to the remaining four customers in connection with this AWC.” The AWC does not name the five representatives.

Private placements the firm did not adequately vet

In the part of the AWC covering private placements, FINRA found that WestPark “failed to conduct and document reasonable due diligence on four private placement offerings by two issuers that the firm recommended to customers.”

The AWC describes the first issuer, identified only as Issuer A, as “a development-stage cannabis company formed in October 2018 with no revenue or operating history.” According to FINRA, WestPark sold approximately $3.1 million of Issuer A’s first offering to 72 retail customers between December 2018 and January 2020, when the company was not yet licensed to conduct a cannabis business. The firm then sold approximately $365,000 of a second Issuer A offering to eight retail customers, seven of them existing investors. FINRA found that before that second offering, WestPark “failed to reasonably investigate red flags, including Issuer A’s default on monthly distributions to investors in the first offering and a legal proceeding against the company by its landlord for failure to pay rent.”

Issuer B ran rent-to-own stores. The AWC states that between September 2019 and January 2020, WestPark, as one of a syndicate of broker-dealers, sold approximately $3.9 million of an Issuer B offering to 90 retail customers. Between May 2022 and December 2023, it sold approximately $2.7 million of a later Issuer B offering to 44 retail customers. According to FINRA, “WestPark’s investigation of both offerings was limited to reviewing third-party due diligence reports commissioned by Issuer B.” FINRA found the firm did not follow up on red flags in those reports, including that Issuer B “could not redeem approximately $30 million in outstanding notes from previous offerings at their maturity.”

A report the issuer commissioned is not an independent check on the issuer.

GWG L Bonds: what the offering documents said

GWG Holdings sold L Bonds through a network of broker-dealers to raise money for its operations. According to the AWC, “L Bonds were not directly secured by GWG’s life insurance portfolio and were not rated by any bond rating agency.” The AWC also states that the offering documents for the fourth L Bond offering, which began in June 2020, “stated that the bonds could be considered speculative, involved a high degree of risk, were illiquid, and were only suitable for persons with substantial financial resources and with no need for liquidity.”

Those documents described an investor with substantial resources and no need for liquidity, close to the opposite of a moderate-risk customer, let alone a senior.

According to the AWC, GWG defaulted on its obligations to L Bond investors in January 2022, filed for bankruptcy in April 2022, and had its bankruptcy plan confirmed in June 2023, with a litigation trust created effective August 2023 to pursue claims against third parties.

The AWC describes alternative investments like L Bonds as products offered to increase potential returns that may carry greater risk, less market liquidity, and less transparency about pricing and value. The AWC states that the offering documents described L Bonds as illiquid.

WestPark’s earlier regulatory record

The June 2026 AWC is not WestPark’s first. According to that AWC, in 2021 “FINRA found that, among other violations, WestPark made negligent misrepresentations and omissions to investors in multiple private placement offerings and failed to supervise its representatives during those offerings.” The AWC states the firm consented to a censure, a $250,000 fine, and undertakings that included offering rescission to the holders of 19 notes. BrokerCheck lists that matter as FINRA case 2017054381603.

BrokerCheck records also show a December 2023 FINRA action, case 2020067785302, in which the firm consented to findings that it “failed to develop and implement a reasonable AML program.” According to BrokerCheck, the firm was censured, fined $475,000, ordered to pay $218,160.36 plus interest in restitution to customers, and required to retain an independent consultant.

Two customer arbitrations ended in awards against the firm. BrokerCheck shows that FINRA arbitration case 09-04244 resulted in an award on December 29, 2010, with total relief awarded of $585,000. FINRA arbitration case 20-00320, which included allegations of churning, elder abuse, suitability, and unauthorized trading, resulted in an award on May 25, 2021, with total relief awarded in the case of $794,432.12.

The rules that applied to these recommendations

For recommendations made on or after June 30, 2020, Regulation Best Interest (17 C.F.R. § 240.15l-1) requires a broker-dealer recommending a securities transaction or investment strategy to a retail customer to act in that customer’s best interest, without putting its own interest first. Its Care Obligation requires reasonable diligence, care, and skill to understand a product’s risks, rewards, and costs, and a reasonable basis to believe the recommendation is in the customer’s best interest given the customer’s investment profile, including age, risk tolerance, liquidity needs, and objectives. Before that date, FINRA Rule 2111 governed these recommendations, requiring a reasonable basis to believe a recommendation was suitable for the customer. The L Bond sales in this AWC span both periods.

FINRA Rule 3110 requires a firm to maintain a supervisory system and written procedures reasonably designed to achieve compliance with the securities laws and FINRA rules. FINRA’s AWC found that WestPark’s procedures recited the rules but did not include procedures for conducting reviews to comply with them, or for when supervisors should escalate concerns. For private placements, the AWC cites FINRA Regulatory Notice 10-22, which tells firms they cannot rely solely on the issuer and must investigate red flags.

California adds another layer for older investors. For a California resident 65 or older, California’s Elder Abuse and Dependent Adult Civil Protection Act (Welf. & Inst. Code §§ 15610.27, 15610.30, 15657.5) may allow recovery of attorney’s fees and costs where financial abuse is proven. The AWC does not say where its four senior customers lived.

What WestPark customers can do

An investor who lost money on L Bonds or a private placement sold through WestPark may be able to bring a claim in FINRA arbitration, where customer disputes with broker-dealers are typically heard. Eligibility is governed in part by FINRA Rule 12206. Damages are often measured as out-of-pocket loss, though some claims support a well-managed-account analysis, which compares the actual result to what a suitable portfolio would have earned. Whether either applies depends on the facts, the paperwork, and what the customer was told.

The restitution in this AWC covers four specific customers. If you weren’t one of them, the AWC pays you nothing, though it does not prevent you from pursuing your own claim.

Steps to Take Right Now

1. Gather your account statements, trade confirmations, and any correspondence with your broker or firm, including emails, texts, and written materials about the investments.
2. Look up your broker on FINRA BrokerCheck at brokercheck.finra.org to review their full disclosure record.
3. Contact a securities arbitration attorney for a consultation to evaluate your options.

Rosenberger + Kawabata represents retail investors in FINRA arbitration proceedings involving failure to supervise and unsuitable speculative bond recommendations, and inadequate private placement due diligence. Contact Rosenberger + Kawabata online for a free and confidential consultation, or call (310) 894-6921.

The information in this post comes from FINRA’s public records, including Acceptance, Waiver and Consent No. 2021070498107, and BrokerCheck database. You can view the full detailed report (CRD# 39914) here.

You can view the full August 2026 FINRA disciplinary actions report here.