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Alternative Investment

CEO, CFO resign from bankrupt GWG Holdings following internal review

Dallas alternative asset manager GWG Holdings is losing two of its top executives seven months after it filed for bankruptcy following an internal review that uncovered former board members’ concerns about an investment that were ignored.

The CEO and CFO of the company that sells bonds backed by life insurance policies, Murray Holland and Timothy Evans, respectively, have resigned but will remain on the board, according to a filing with the U.S. Securities and Exchange Commission.

In an announcement, the company said it expected to have more information “in the coming days.” GWG spokesman Dan Callahan said the company couldn’t provide any additional information at this time.

The departures are related to the circumstances surrounding the resignation of three directors last year – Roy Bailey, Daniel Fine and Jeffrey MacDowell.

The board members had been on a special committee formed to approve or reject potential transactions with Beneficient Company Group L.P., the startup of former chairman Brad Heppner. Beneficient helps the ultra-wealthy turn nonliquid assets into cash and recently went public in September. It had a partnership with GWG before separating into an independent company in November 2021.

Since 2018, GWG invested at least $230 million into Beneficient, the Wall Street Journal reported.

The original SEC filing announcing the three resignations stated the departures “were not due to any disagreement with the company.” In a new filing on Monday, the company said an investigations committee found new information that it shared with the current board, which determined that a disagreement “relating to certain operations, policies and practices of the company” led to the resignations.

The new filing included attachments to their original letters of resignation from March 6, 2021.

The three directors had objected to “certain terms and parameters of a proposed investment the company was considering” in Beneficient. They made their objections known to CEO Holland and CFO Evans in writing and verbally, the filing states.

After the directors relayed their concerns, the board held a special meeting to consider certain “urgent” matters about the investment in question. At this meeting, the investment was approved although the disagreements hadn’t been resolved, something that all board members may not have known, the filing states. In order to approve the investment, the board voted to dissolve the special committee meant to review transactions with Beneficient.

“At the time of the resigning directors’ resignations, the disagreements remained outstanding, which was known to, at least, the chief executive officer of the company,” the filing states.

The filing also included a copy of an email that resigning director Fine sent to Holland on March 10, 2021, that said, “We believe our resignations speak for themselves and decline to advise the company on its disclosure obligations.”

GWG filed for bankruptcy after it was forced to stop selling L Bonds because of accounting problems uncovered by the SEC and the resignation of its auditor, according to the Wall Street Journal. The company filed for bankruptcy with $2 billion in debt, including $1.6 billion in outstanding bonds.

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