Linda Wimsatt Suspended for Alleged Unsuitable GWG L Bond Recommendations

Linda Wimsatt (CRD #: 1401802), a broker formerly registered with American Trust Investment Services, has been suspended by FINRA, according to her BrokerCheck record, accessed on December 15, 2024. Read on if you have questions about her alleged conduct as a broker.

FINRA Suspension

On November 15, 2024, Linda Wimsatt consented to the entry of findings that she allegedly made unsuitable recommendations of GWG L Bonds in 2020.

According to a Letter of Acceptance, Waiver & Consent (AWC), Linda Wimsatt allegedly recommended L Bonds to three married couples and an additional investor, most of whom were seniors. These investors allegedly all had moderate risk tolerances and did not have investment objectives of speculation.

The AWC alleges that Linda Wimsatt made recommendations to the following investors:

• Customers A1 and A2: Investment of $100,000, composing 24% of their net worth and generating $2,632.50 in commissions.
• Customers B1 and B2: Investments totaling $625,000, composing more than 30% of their net worth. One recommendation generated $8,036 in commissions.

The AWC alleges that the offering documents for the relevant rounds of L Bonds stated they could be considered speculative, high-risk, illiquid, and only suitable for investors with substantial financial resources. GWG Holdings defaulted on its obligations to L Bond holders in January 2022 and filed for bankruptcy in April 2022.

Additionally, the AWC alleges that Linda Wimsatt made recommendations of L Bonds that were not in certain clients’ best interests:

• Customers C1 and C2: Investments of $500,000, composing 22% of their liquid net worth. One of these recommendations generated $8,500 in commissions.
• Customer D: Investments totaling $116,936, composing more than 11% of her net worth. One of these recommendations generated $1,806.25 in commissions.

The AWC concluded that Linda Wimsatt’s alleged recommendations to Customers A1, A2, B1, and B2 violated FINRA Rules 2111 and 2010, and that her alleged recommendations to Customers C1, C2, and D violated FINRA Rule 2010 and Securities Exchange Act Rule 15l-1(a)(1).

FINRA Rule 2010

FINRA Rule 2010 holds brokers to high standards of commercial honor and just and equitable principles of trade.

FINRA Rule 2111

FINRA Rule 2111 requires brokers to take into account investors’ financial goals when recommending investments. Brokers must examine the information described in an investor’s profile, such as their age, tax status, and risk tolerance.

Investors who rely on brokers for investment recommendations can potentially recover their losses by pursuing FINRA arbitration.

Regulation Best Interest

Regulation Best Interest (Reg-BI) is an SEC regulation that requires brokerage firms to put their clients’ best interests first. For example, firms must conduct reasonable due diligence when researching investments to ensure their recommendations are suitable for the investor.

Sanctions

Linda Wimsatt consented to the following sanctions:

• 4-month suspension from associating with FINRA members
• $10,000 fine
• Partial restitution of $20,974.75 plus interest

Her suspension began on November 18, 2024, and will end on March 17, 2025. You can read the full AWC here.

Investor Disputes

On October 22, 2024, an investor filed a dispute naming Linda Wimsatt in allegations of fraud, breach of contract, negligence and gross negligence. The dispute further alleged violations of federal and California state securities laws, and California laws concerning elder financial abuse and unfair, unlawful, and fraudulent business practices. The client seeks $130,000 in damages.

On November 1, 2023, an investor alleged that Linda Wimsatt engaged in misrepresentation and overconcentration, and failed to conduct reasonable due diligence on an investment. The client seeks $625,000 in this pending dispute.

Another dispute filed on November 1, 2023, alleged that Linda Wimsatt breached her contract, engaged in negligence and negligent misrepresentation, and violated Regulation Best Interest. They seek $155,000 in damages.

In a pending dispute filed on June 15, 2023, an investor named Linda Wimsatt in allegations of negligence, failure to supervise, breach of contract, and negligent violation of Regulation Best Interest. The client seeks $150,000.

On October 4, 2022, an investor filed a dispute alleging that Linda Wimsatt misrepresented GWG L Bonds that were unsuitable for the client’s investment objectives. This dispute is pending.

FINRA Rule 2165

FINRA Rule 2165 prohibits the financial exploitation of elderly clients and clients with certain mental or physical impairments.

FINRA Rule 2020

FINRA Rule 2020 prohibits the use of manipulative, deceptive, or otherwise fraudulent tactics to influence investors’ decisions. Misrepresenting an investment’s risks, requirements, or other features violates this rule.

FINRA Rule 3110

FINRA Rule 3110 requires that firms establish systems of supervision to maintain their compliance with securities regulations. Their systems of supervision should be able to catch unsuitable recommendations.

Background Information

Linda Wimsatt has passed the following exams:

• Series 65 – Uniform Investment Adviser Law Examination
• Series 63 – Uniform Securities Agent State Law Examination
• SIE – Securities Industry Essentials Examination
• Series 7 – General Securities Representative Examination
• Series 24 – General Securities Principal Examination

She has worked for the following firms:

• American Trust Investment Services (CRD#:3001)
• WestPark Capital (CRD#:39914)
• VFG Securities (CRD#:15121)
• SagePoint Financial (CRD#:133763)
• SunAmerica Securities (CRD#:20068)
• Great Western Financial Securities Corporation (CRD#:14229)
• Griffin Financial Services (CRD#:10823)
• IDS Life Insurance Company (CRD#:6321)
• Financial Network Investment Corporation (CRD#:13572)
• American Pacific Securities Corporation (CRD#:5003)
• American Express Financial Advisors (CRD#:6363)
• S. D. Cohn & Company (CRD#:735)

Kurta Law Can Help

If you worked with Linda Wimsatt and you have concerns about your investments, please contact us today at 877-600-0098 or info@kurtalawfirm.com for a free consultation.

For over 20 years, Kurta Law has advocated on behalf of investors who want to recover their investment losses from brokers and brokerage firms. Kurta Law is a nationally recognized law firm and exclusively represents investors against brokers and brokerage firms on a contingency basis. This means that the firm only earns a fee if our securities attorneys recover money on your behalf.