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L Bond Were Always Impaired

By Craig McCann and Regina Meng

You can download a pdf of this article to print or email here.

Introduction

GWG bonds were always impaired. GWG was able to sell impaired bonds for 10 years because its equity float was too small to be covered by Wall Street analysts, its stock was too thinly traded to short sell and third tier brokerage firms looked the other way in exchange for extraordinary sales commissions.

In "GWG's Decade-long Fraud Started Well Before Beneficient Joined In" we...

GWG's Decade-Long Fraud Started Well Before Beneficient Joined In

By Craig McCann and Regina Meng.

Three Wall Street Journal stories describe alleged diversion of assets at GWG/Beneficient in 2019 and later to entities controlled by its CEO.[1] The WSJ stories mention an SEC investigation into accounting practices at GWG/Beneficient focused on the treatment of intra-company transactions and the calculation of comical "goodwill" Beneficient put on its books as it combined with GWG. In addition to these post 2018 issues, GWG's use of demonstrably unreliable...

Beneficient's Trading is Bad Omen for GWG Bondholder Recoveries

By Craig McCann and Regina Meng.

An image of the GWG Ben logo.


We have found so many red flags in GWG Holdings' public filings years before its bankruptcy filing in 2022 that no unconflicted broker would have recommended GWG's L Bonds and no fully informed investor would have bought them. Nonetheless, $1.3 billion face value of L Bonds remained outstanding at the time of the bankruptcy. These bonds were sold by third tier brokerage firms in pursuit of undisclosed commissions as high as 8%.

We will tell a more...

Blackstone Fiddles as BREIT Burns

By Craig McCann and Regina Meng.

You can download a pdf of this article to print or email here.

Introduction

In December, we argued that Blackstone Real Estate Income Trust ("BREIT") smoothed and inflated its reported returns for years, leading to large investor inflows. [1] We predicted that a run on the bank had started because of Blackstone's prior conduct, leaving it with two very bad options. BREIT could honor redemption requests at posted NAVs and see its NAV cut in half as the NAV...

HJ Sims Reg D Offerings: Heads, HJ Sims Wins - Tails, Their Investors Lose - UPDATED December 14, 2022 with Footnote 2 and Footnote 3

By Craig McCann, Susan Song, Chuan Qin, and Mike Yan.

Introduction

We have been researching Reg D offerings. You can read our previous posts "Reg D Offerings Summary Statistics" here and "$8 Trillion of Broker-Sold Reg D Offerings" here. You can download and print or email this post by clicking here.

In our research, we have come across thousands of interesting Reg D Offerings. HJ Sims Reg D Offerings provide great examples of potential Reg D mischief.

The Reg D exemption from...

Blackstone's Choice: Let BREIT Crash or Collapse It Slowly?

By Craig McCann and Regina Meng.

Introduction

Last week, Blackstone Real Estate Income Trust ("BREIT") announced that it was not going to honor redemption requests from investors in excess of 2% per month and 5% per quarter. In response, Blackstone's stock price fell 7% the first day and another 7% over the following week.

In this note, we explain how BREIT smoothed and inflated its reported returns for years, leading to extraordinary accolades, a prominent role in important regulatory...

First National Realty Partners Reg D Offerings: Muppets Do Commercial Real Estate

By Craig McCann, Susan Song, Chuan Qin, and Mike Yan.

You can read our previous posts Reg D offerings:

1) "Reg D Offerings Summary Statistics" here,
2) "$8 Trillion of Broker-Sold Reg D Offerings" here,
3) "HJ Sims Reg D Offerings: Heads Sims Wins, Tails their Investors Lose" here, and
4) "Inactive and Delinquent Reg D Issuers" here.

You can download and print or email this post by clicking here.

Introduction

In a recent note, we explained how HJ Sims executives formed 91 separate...

Inactive and Delinquent Reg D Issuers

By Craig McCann[1], Chuan Qin[2], and Mike Yan[3].

We have been researching Reg D offerings. You can read our previous posts "Reg D Offerings Summary Statistics" here, "$8 Trillion of Broker-Sold Reg D Offerings" here and "HJ Sims Reg D Offerings: Heads Sims Wins, Tails their Investors Lose" here. You can download and print or email this post by clicking here.

I. Introduction

Regulation D issuers are not required to provide disclosures that are mandatory in registered offerings. Not only...

$8 Trillion of Broker-Sold Reg D Offerings

By Craig McCann[1], Mike Yan[2] and Chuan Qin[3].

We previously published Reg D Offerings Summary Statistics describing the aggregate issuance totaling over $20 trillion between 2009 and July 2022. You can read that post here.

In this post we provide summary statistics for Reg D offerings sold by broker dealers. You can get a pdf copy of this post to print or email by clicking here. Next week, we will be posting information on the extremely high failure rates for Reg D offerings.

I....

Regulation D Offerings Summary Statistics

By Craig McCann, Chuan Qin and Mike Yan.

I. Introduction

Securities issuers can either register their securities with the Securities and Exchange Commission, making extensive information about their business and the offering publicly available, or they can sell unregistered securities making almost no information available to regulators. Issuers of unregistered securities file Form D reports with the SEC on which the issuers provide cursory information and claim an exemption from...

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