Tony Barouti, a Los Angeles-based broker registered with Emerson Equity, is facing multiple investor complaints stemming from the sale of bonds underwritten by GWG Holdings Inc., which declared bankruptcy this week.
According to the website for GWG Holdings, Emerson Equity, a San Mateo, California-based broker-dealer that primarily sells private placements, is the managing broker-dealer for the GWG issuer of $1.6 billion bonds backed by life settlements. After defaulting on $13.6 million in bond payments in January, GWG Holdings declared Chapter 11 bankruptcy Wednesday morning in U.S. Bankruptcy Court for the Southern District of Texas.
Along with Emerson Equity, 145 broker-dealer firms sold the bonds, according to court filings. Many will undoubtedly face investor complaints under the roof of Financial Industry Regulatory Authority Inc. arbitration. It's not clear what value, if any, the GWG bonds have right now.
Barouti currently has two investor complaints alleging $1.37 million in damages from sales of corporate debt, according to his BrokerCheck profile. He has been registered with Emerson Equity since 2017.
Two attorneys with complaints against Barouti or Emerson Equity said many of his clients were of Iranian heritage and he marketed the bonds through infomercials on Persian language radio in Southern California.
Barouti did not return calls on Friday morning to comment. Dominic Baldini, the president and owner of Emerson Equity, also did not return a call Friday to comment.
"We filed a Tony Barouti case this week, and from what I understand he was heavily involved in outreach on Persian radio in Los Angeles," said Ryan Bakhtiari, a plaintiff's attorney. "With GWG filing for bankruptcy this week, that will spur more investor claims because it gives a sense of finality to investors."
"The investor in our case lost $250,000, and it was sales practice issues and representations about the safety of the bonds," Bakhtiari said. "The money represented a pretty big chunk of the client's life savings. I suspect there will be major due diligence issues for broker-dealers that sold this as well."
"This is a very sad situation," said Marc Fitapelli, another attorney. "One of our clients is in his seventies, works a retail job at Home Depot and lost 100% of his net worth. I am shocked by some of the sales."
In one case, Fitapelli represents more than a dozen clients who are suing Emerson Equity in Finra arbitration, and Barouti was their broker. According to the claim, Barouti's clients "all learned of and purchased GWG L Bonds through" Barouti.
Using the ads and infomercials, Barouti "made false and misleading statements about the investment, including false representations that monthly interest payments were 'insured' or 'guaranteed,'" according to the complaint. "Barouti generally characterized GWG L Bonds to the [customers] as risk free, insured and simple investments."
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
