The Texas State Securities Board on Tuesday hit a small broker-dealer, Landolt Securities Inc., with a disciplinary order for various alleged violations of state securities rules related to sales of GWG Holdings Inc. L bonds to instate investors.
Based in Lake Bluff, Ill., Landolt Securities agreed to a $10,000 fine and a reprimand, according to the Texas order. A call to the firm’s owner and CEO, Donald McKiernan, on Wednesday was not immediately returned.
Two of the firm’s advisors were also sanctioned and agreed to refund certain clients, according to Texas.
“The monitoring systems this firm had in place were insufficient to detect unsuitable sales of high-risk investments,” said Deputy Commissioner Cristi R. Ochoa in a statement. “As such, certain sales were approved that frankly, should not have been.”
Close to 40 broker-dealers sold about $1.6 billion in speculative, illiquid GWG L bonds before GWG declared bankruptcy in 2022, leaving customers who bought the product in the lurch.
The Texas order follows a staff investigation triggered by a customer complaint disclosure in January 2025 concerning L Bond sales, according to a statement from the Texas State Securities Board.
GWG L Bonds were high yield, unrated corporate bonds originally used to finance life insurance policies and later invested in loans backed by illiquid alternative assets, according to Texas. The bonds paid interest rates between 5.50% and 8.50%, depending on maturity.
Investing in L Bonds carried significant risk, including the potential loss of the entire investment. The bonds were speculative and suitable only for investors with substantial financial resources and no need for liquidity.
“The investigation found that the firm and agents approved L Bond sales that violated its internal suitability guidelines,” according to Texas. “Some investors allocated between 24% and 29% of their net worth to L Bonds, exceeding the 15% limit. Others were over the firm’s age threshold of 70%.”
“Client account forms were incomplete or inconsistent, failing to properly document whether the investments exceeded the thresholds or the rationale for approval,” according to Texas. “Despite these deficiencies, the transactions were authorized.”
Bradley Heppner, the former chair of GWG Holdings Inc. and Beneficient, a closely related company, in November was charged by the Department of Justice with five counts, including securities and wire fraud, related to a scheme to steal $150 million.
According to the federal indictment, Heppner received more than $150 million in payments through funneling money from GWG to a shell company he controlled at Beneficient.
Heppner used these funds for a variety of expenses, according to the indictment. Meanwhile, GWG declared bankruptcy in 2022.
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