Erez Law is currently investigating financial advisors across the United States who recommend their clients invest in GPB Capital Holdings, a New York-based investment firm that offers exempt, private-placement securities that inherently have a high degree of risk due to their nature as unregistered securities offerings (and without regulatory oversight).
The investment firm raised $1.8 billion from investors through private placements that invested in automotive dealerships, the waste management industry, and middle market lending. These investments were high risk and high commission private placements.
The Securities and Exchange Commission (SEC) and FINRA are investigating GPB Capital Holdings and the accuracy of disclosures made to investors, performance of funds, and the distribution of capital to investors.
In February 2019, the FBI and officials from the New York City Business Integrity Commission entered the firm’s Manhattan offices.
In September 2018, Massachusetts Secretary of the Commonwealth William Galvin announced an investigation into 63 broker-dealer firms that sold private placements from GPB. In November 2018, Crowe LLP, the firm’s auditor, resigned.
According to public records, in August 2018, GPB Capital Holdings, a seller of high-risk, high-commission private placements, ceased raising capital from investors. GPB Capital Holdings missed sending the SEC financial reports on April 30, 2018 and is now straightening out the accounting for two of its larger funds – GPB Holdings II and GPB Automotive Portfolio. It is reported that GPB Capital Holdings raised $600-$800 million from 4,000 investors through independent brokerage firms, and claims to have raised $1.5 billion in total. Additionally, the Massachusetts Securities Division is investigating 63 roker-dealers who allegedly sold private placement investments of GPB Capital Holdings, including:
- Royal Alliance Associates Inc.
- Sagepoint Financial Inc.
- FSC Securities Corp.
- Woodbury Financial Services Inc.
GPB Capital Holdings was launched in 2013 with a focus on buying auto dealerships. According to the SEC, GPB Automotive Portfolio raised $622.1 million from wealthy investors since 2013, and the minimum investment in GPB Automotive Portfolio was $100,000. GPB Holdings II raised $645.8 million since 2015. GPB Holdings II and GPB Automotive Portfolio together have paid brokers $100.1 million in commissions at a rate of 7.9%.
Pursuant to FINRA Rules, member firms are responsible for supervising a broker’s activities during the time the broker is registered with the firm. Therefore, brokerage firms around the country may be liable for investment or other losses suffered by its customers.
Erez Law represents investors in the United States for claims against brokers and brokerage firms for wrongdoing. If and have experienced investment losses, please call us at 888-840-1571 or complete our contact form for a free consultation. Erez Law is a nationally recognized law firm representing individuals, trusts, corporations and institutions in claims against brokerage firms, banks and insurance companies on a contingency fee basis.
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