A former registered rep who defended himself in a recent arbitration dispute related to the sale of distressed GWG Holdings Inc. L bonds lost the lawsuit to a client and is on the hook for $122,300 in damages, according to the Finra Dispute Resolution Services award from last week.
The former advisor, John F. Schlagheck, did not have a lawyer and appeared pro se, according to the arbitration award, which was decided by three panelists last Wednesday in Denver.
About 40 broker-dealers sold close to $1.6 billion in GWG L bonds, so-called because they were backed by life settlements, before the firm declared bankruptcy in 2022, leaving investors in the lurch.
The claim against Schlagheck was part of a larger complaint with other advisors and a firm settling claims against them.
Not Schlagheck worked at 19 different brokerage firms between 1982 and last year, according to his BrokerCheck profile.
A call to Schlagheck’s office in Ottawa Lake, Mi., on Monday could not be completed as the company mailbox was full.
“The old saying is true: he who represents himself has a fool for a lawyer,” said Andrew Stoltmann, and plaintiff’s attorney. “There are massive landmines in the Finra arbitration process. Beating up on a broker who is not represented by an attorney is akin to taking candy from a baby.”
“And if the advisor doesn’t have a lawyer, the odds are high he won’t be able to pay the award,” Stoltmann added.
One customer, Daniel Simon, alleged violations of Michigan Uniform Securities Act and violation of Michigan Consumer Protection Act, according to the award, and his claims against Schlagheck related to investments in GWG Holdings Inc. L Bonds, GWG L Bonds, and other investments.
Simon was part of the claim filed in 2022 and was seeking $146,000 in damages, according to the award.
“Schlagheck appeared pro se for the hearing by his own choice,” according to the Finra panel. “It should be noted that Schlagheck totally failed to participate in discovery, claiming he had no documents in his possession but failed to request documents for Intervest.”
Intervest International Equities Corp. was the broker-dealer named in the arbitration complaint and settled the matter for an undisclosed amount, according to the award. Schlagheck was registered there from 2017 to 2022.
“During the evidentiary hearing, Schlagheck made several objections some of which were sustained, some denied,” according to the Finra panel.
For sellers weighing PE deals, due diligence shouldn't end with the offer on the table – the acquiring platform and the M&A advisor deserve a hard look as well.
South Carolina estate planning firm joins Osaic’s IBD network, citing succession planning tools and multigenerational growth resources.
A new SIFMA and KPMG study of more than 2,100 US investors finds satisfaction high, AI-only trust falling, and demand for human guidance growing across every generation.
Retail banks and private wealth firms scored 40 in Fitch's AI stress test, signaling possible one-notch downgrade risk under an adverse scenario.
Elsewhere, Wells Fargo Advisors adds a $400 million Morgan Stanley veteran in Naples as an ex-Cetera advisor goes independent with LPL.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
