Texas State Securities Board
AUSTIN, Texas — Earlier today, Deputy Securities Commissioner for the state of Texas, Cristi R. Ochoa, issued three orders against Landolt Securities, Inc. [ [link removed] ], Ting Chen [ [link removed] ], and Wang Chang Tsai [ [link removed] ] (“Respondents”)* *for failures in supervising the sale of GWG Holdings Inc. (“GWG”) L Bonds to Texas investors. These orders reprimand Respondents, order Respondents to provide refunds to certain clients, and assess administrative fines against Respondents.
The action follows a staff investigation triggered by a customer complaint disclosure in January 2025 concerning L Bond sales. 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. 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. L Bond holders’ claims to the underlying life insurance assets were subordinate to the creditors of GWG subsidiaries, increasing the risk of loss. GWG Holdings Inc. filed for Chapter 11 bankruptcy in April 2022.
The investigation found that the firm and agents approved L Bond sales that violated its internal suitability guidelines. 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. Despite these deficiencies, the transactions were authorized.
The Texas Securities Act and the Board’s Rules require broker‑dealers to maintain supervisory systems reasonably designed to achieve compliance with applicable securities laws. The Deputy Commissioner concluded that the firm’s failure to enforce its guidelines and verify client information is a violation of §115.10 of the Board Rules, and the agents’ failure to ensure that clients’ concentration in L Bonds did not exceed 15% of their net worth, and that clients over the age of 70 did not purchase L Bonds, constituted inequitable practices in the sale of securities.
“The monitoring systems this firm had in place were insufficient to detect unsuitable sales of high-risk investments,” said Deputy Commissioner Ochoa. “As such, certain sales were approved that frankly, should not have been. We appreciate the firm’s cooperation throughout the process and appreciate the agents agreeing to refund certain clients. Any day we can get money back into the hands of aggrieved investors is a good day. Protecting Texas investors is, after all, our pivotal mission.”
Nadda Rungruangphol, an attorney in the Legal and Investigations Division, led the agency’s good work in the matter.
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