FINRA Hits WestPark Capital With $175K Fine, $345K Restitution Over GWG L Bond Sales

The Financial Industry Regulatory Authority has censured and fined WestPark Capital, Inc. $175,000 and ordered the Los Angeles-based broker-dealer to pay $345,073 in restitution after finding the firm failed to reasonably supervise recommendations of GWG L bonds to retail customers and failed to establish an adequate supervisory system for private placement due diligence.

FINRA accepted WestPark’s letter of acceptance, waiver, and consent this week. The firm signed the AWC on June 1 without admitting or denying the findings.

The action is the second FINRA enforcement settlement against WestPark in five years. In a 2021 AWC, FINRA found the firm made negligent misrepresentations and omissions to investors in multiple private placement offerings and failed to supervise its representatives during those offerings, resulting in a censure, a $250,000 fine, and a requirement that the firm offer rescission to the holders of 19 notes.

GWG L Bond Sales

Between March 2019 and February 2021, five of WestPark’s registered representatives recommended GWG L bonds to 10 retail customers in transactions the AWC found were not in the customers’ best interests or suitable for them. All 10 customers had moderate risk tolerances and investment objectives that did not include speculation; four were seniors. As a result of the recommendations, between 11% and 75% of the customers’ liquid net worth became invested in alternative investments – in GWG L bonds alone or in combination with other alternatives.

FINRA found that WestPark’s written procedures recited the requirements of Regulation Best Interest and FINRA Rule 2111 but did not include procedures for conducting reviews to comply with those requirements, and failed to address how supervisors should escalate concerns about individual or patterns of investment recommendations.

GWG Holdings, Inc., which sold the L bonds through a network of broker-dealers including WestPark – which entered into an agreement to sell L bonds in July 2016 – defaulted on its obligations to L bond investors in January 2022 and filed for bankruptcy in April 2022. The bankruptcy court confirmed GWG’s plan in June 2023.

The approximately $1.6 billion in L bonds sold through roughly 40 broker-dealers left many investors facing recovery of roughly three cents on the dollar under a proposed bankruptcy settlement.

The GWG matter has produced a sustained wave of enforcement activity. In May 2026, a Manhattan federal jury convicted Bradley Heppner, the former chairman of GWG Holdings and Beneficient, on all four counts, including securities fraud and wire fraud. At the firm level, AltsWire has previously reported FINRA actions against Cape Securities over GWG L bond sales. Six of WestPark’s 10 affected customers settled arbitration proceedings against the firm; WestPark is paying restitution to the remaining four under the AWC.

Private Placement Due Diligence

FINRA also found that since at least December 2018, WestPark failed to establish a supervisory system reasonably designed to ensure adequate due diligence when recommending private placements. The AWC details failures across four offerings by two issuers.

The first issuer, described in the AWC as a development-stage cannabis company formed in October 2018 with no revenue or operating history and not yet licensed to conduct a cannabis business, raised approximately $3.1 million from 72 WestPark retail customers in its first offering between December 2018 and January 2020. The AWC found WestPark failed to reasonably investigate the feasibility of the company’s license applications or its plan to generate revenue. A subsequent offering by the same issuer – sold to eight customers between July and August 2020, seven of whom were existing investors – raised approximately $365,000. Before recommending that offering, WestPark failed to investigate red flags that included the company’s default on monthly distributions to first-offering investors and a legal proceeding against it by its landlord for unpaid rent.

The second issuer, a rent-to-own retailer, raised approximately $3.9 million from 90 WestPark customers in a first offering between September 2019 and January 2020, and approximately $2.7 million from 44 customers in a subsequent offering between May 2022 and December 2023. In both cases, WestPark’s investigation was limited to reviewing third-party due diligence reports commissioned by the issuer itself. The AWC found the firm conducted no independent due diligence and failed to follow up on red flags in those reports, including a high debt-to-equity ratio and the issuer’s inability to redeem approximately $30 million in outstanding notes from prior offerings at maturity.

Sanctions

In addition to the $175,000 fine and $345,073 in restitution plus interest, WestPark agreed to an undertaking requiring a senior management registered principal to certify within 90 days that the firm has remediated the supervisory deficiencies identified and implemented a compliant written supervisory procedures program. The restitution is owed to four customers; the remaining six settled arbitration claims separately.

FINRA reported that the willful violation finding makes WestPark subject to a statutory disqualification with respect to membership under Article III, Section 4 of FINRA’s bylaws.

WestPark Capital, Inc. has been a FINRA member since 1996. The firm employs approximately 55 registered representatives, and operates five branch offices.

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