SEC Charges Broker-Dealer and Investment Adviser and Registered Representative with Violating Regulation Best Interest

ADMINISTRATIVE PROCEEDING
File No. 3-21983; 3-21984

The Securities and Exchange Commission today announced settled charges against both New York-based dually-registered broker-dealer and investment adviser LifeMark Securities Corporation ("LifeMark") and Geoffrey Wolterstorff ("Wolterstorff"), a registered representative of LifeMark, for violating Regulation Best Interest.

According to SEC Orders, between July 2020 and January 2022, LifeMark and Wolterstorff failed to comply with Regulation Best Interest by recommending L Bonds issued by GWG Holdings, Inc. ("GWG") to retail customers without exercising reasonable diligence, care, and skill to understand the potential risks, rewards and costs associated with the recommendations. A June 2020 Prospectus disclosed risks associated with L Bonds, including that: L Bonds involved a "high degree of risk, including the risk of losing [one's] entire investment[;]" "[i]nvesting in L Bonds may be considered speculative[;]" and "L Bonds are only suitable for persons with substantial financial resources and with no need for liquidity in this investment."

The Orders find that Wolterstorff and LifeMark, acting through Wolterstorff, failed to comply with Regulation Best Interest's Care Obligation by unreasonably disregarding, dismissing, misunderstanding, or failing to take reasonable steps to understand significant disclosures and information regarding GWG and L Bonds contained in the June 2020 Prospectus, a November 2021 L Bond Prospectus Supplement, and GWG's 2020 Form 10-K. Instead, the Orders find that Wolterstorff relied on LifeMark's approval of L Bonds without question or inquiry.

The Orders find that in December 2021, Wolterstorff and LifeMark, acting through Wolterstorff, further failed to comply with Regulation Best Interest's Care Obligation by recommending a $50,000 L Bond with a 5-year term to a 63-year old semi-retired retail customer with a moderate risk tolerance and whose only documented investment objective was "Preservation of Capital [I (We) cannot tolerate loss of principal." This retail customer used retirement funds to purchase the L Bond and specifically explained to Wolterstorff he did not want to lose his principal. The Orders find the recommendation was inconsistent with the customer's investment profile.

The SEC's Orders find that by failing to comply with Regulation Best Interest's Care Obligation, LifeMark and Wolterstorff willfully violated Regulation Best Interest's General Obligation. Without admitting or denying the SEC's findings LifeMark has agreed to a cease-and-desist order, a censure, disgorgement and prejudgment interest of $5,115.48, and a civil money penalty of $85,000. Without admitting or denying the SEC's findings, Wolterstorff has agreed to a cease-and-desist order, a censure, disgorgement and prejudgment interest of $28,421, a civil money penalty of $15,000, a six-month suspension from association with any broker, dealer, investment adviser, municipal securities dealer, municipal advisor, transfer agent, or nationally recognized statistical rating organization, and a 6-month suspension from participating in any offering of a penny stock.

The SEC's investigation was conducted by Jonathan Epstein and supervised by C.J. Kerstetter of the SEC's Chicago Regional Office.