A Los Angeles-based broker who was a big seller of GWG Holdings bonds is facing a staggering $7.85 million in investor lawsuits as GWG winds its way through bankruptcy proceedings and no one knows what the bonds are worth.
The broker, Tony Barouti, is registered with Emerson Equity, the lead seller and underwriter of GWG bonds. In addition to Emerson Equity, 145 broker-dealer firms sold the bonds, eventually raising $1.6 billion.
After defaulting on $13.6 million in bond payments in January 2022, GWG Holdings declared Chapter 11 bankruptcy three months later in U.S. Bankruptcy Court for the Southern District of Texas.
InvestmentNews first reported on investor complaints targeting Barouti that same month, April 2022. At the time, Barouti had two investor complaints registered with the Financial Industry Regulatory Authority Inc. that alleged $1.37 million in damages from sales of corporate debt. The number of complaints has since skyrocketed and now totals 25 pending cases filed since 2022, according to his BrokerCheck profile.
Barouti did not return calls this week to comment.
He faces a variety of allegations in investors' complaints, according to BrokerCheck, including negligence, breach of fiduciary duty and violation of Regulation Best Interest, the new industry sales standard that went into force in June 2020.
In response to each investor complaint reported on his BrokerCheck profile, Barouti responds with an identical denial.
"The allegations against me are false," he states. "At all times, I acted within the bounds of [Securities and Exchange Commission], Finra, and state securities laws and regulations. I intend to vigorously defend myself against these claims."
Barouti has been registered with Emerson Equity since 2017. Seven arbitration claims targeting Barouti have been settled; in those complaints, customers initially alleged $3.1 million in damages and settled for close to $1 million, or 32 cents on the dollar.
If that math were to hold on the current $7.85 million in investor complaints the broker faces, it would translate into roughly $2.5 million in payments to investors.
"My case has been resolved and settled with the customer," said Ryan Bakhtiari, a plaintiff’s attorney.
Many of Barouti's clients were of Iranian heritage, according to attorneys, and he marketed the bonds through infomercials on Persian language radio in Southern California.
Nine-month electronic trading freeze and share lending program at the center of dismissed claim.
Meanwhile, Rossby Financial's leadership buildout rolls on with a new COO appointment as Balefire Wealth welcomes a distinguished retirement specialist to its national network.
With a smaller group of companies driving stock market performance, advisors must work more intentionally to manage concentration risks within client portfolios.
Professional athletes are often targets of scam artists and are particularly vulnerable to fraud.
The brokerage giant tells Wall Street it will use artificial intelligence to reach clients it has never been able to serve — and turn the technology's perceived threat into a competitive edge.
As technical expertise becomes increasingly commoditized, advisors who can integrate strategy, relationships, and specialized expertise into a cohesive client experience will define the next era of wealth management
Growth may get the headlines, but in my experience, longevity is earned through structure, culture, and discipline
