With pending investigation into GPB Capital by the United States Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), the Federal Bureau of Investigation (FBI), and the State of Massachusetts Division of Securities, there appears to be no shortage of scrutiny surrounding GPB Capital, and no shortage of negative news for investors in GPB Capital funds.
Just last week the news broke that the United States Department of Justice charged Michael S. Cohn, the Managing Director and a Chief Compliance Officer of GPB Capital, with obstruction of justice. This is more negative news for GPB investors, many of whom have now decided file claims to recover their investment losses related to GPB Capital Funds.
GPB Capital Investigation – MA Securities Division
As investors no doubt clearly recall, in September 2018, the Massachusetts Securities Division launched an investigation relating to GPB Capital. That investigation also included a sweep of the sales practices by the 60+ broker-dealer firms that were involved in the sales of private placement alternative investments in GPB Capital to investors. For many investors, this is very telling as they are considering their options regarding their investment losses in GPB, and the sales practices by the broker-dealer firms and financial advisors that recommended GPB appear to be some of the best options out there for maximizing individual investors. That process involves private customer dispute arbitrations that are typically faster and more efficient than court cases and they generally do not involve depositions of the investors.
The Massachusetts securities regulators are continuing to investigate the firms and sales practices that were marketing GPB to investors. By way of background, the Massachusetts securities regulators are believed to have been prompted by a tip concerning broker-dealer firm sales practices which came shortly after an announcement by GPB Capital that it was halting the raising of new money from investors, and also suspending investor redemptions. Shortly thereafter GPB Capital also ceased paying distributions to investors.
The Massachusetts securities regulators noted that then-recent activity within GPB raised red flags of potential problems and those red flags coupled with sales of private placement investments by independent broker-dealer firms have been an ongoing source of investor harm. The investigation included a sweep of all 63 broker-dealer firms that were selling GPB Capital funds to investors and was seeking information related to the sales activity in the state as well as disclosure and marketing materials provided to investors in connection with solicitation efforts by financial advisors who were recommending GPB investments to investor customers, and also sought information related to investor suitability.
In June 2019, the still delayed financials filed with the SEC showed the reported values of the GPB Capital funds had declined significantly, decreasing by a range of 25% to 73% depending on the individual fund.
What Should GPB Capital Investors Do?
GPB Investors may choose to continue sitting on the sidelines, but keep in mind that there are time limits applicable to potential claims that any GPB investor might be able to bring. GPB investors should consult with an experienced investment attorney regarding their potential claims. Advice or recommendations to GPB investors to “wait” and not take any action may not be in the best interest of the investor and might be coming from a self-serving source.
GPB Capital Lawsuit
Many investors have decided to recover their losses by filing lawsuits. They are alleging that they were mislead into purchasing GPB Capital funds by financial advisors. The critical issue is that GPB Capital is a private placement product that should have been sold only to high net worth investors. However, investigations have shown that GPB Capital was sold to average retail investors that were completely unaware or mislead about the risks of GPB and liquidity issues.
If you invested in a GPB fund, you may be able to recover your investment losses. For more information, or to speak with an experienced investment fraud lawyer (at no charge) visit InvestmentFraudLawyers.com or call (888) 628-5590 to speak privately to a securities attorney to learn about your legal options.
Haselkorn & Thibaut, P.A., is an investment fraud law firm that specializes in representing investor clients in investment fraud matters and FINRA arbitration cases nationwide. They have over 100 years of combined legal experience representing investors (both individual and institutional investors) seeking to aggressively pursue their claims and maximizing client recoveries of investment losses for victims of negligence or investment fraud.
The sole purpose of this press release is to investigate the manner in which GPB Capital funds were approved for sale by broker-dealers to investor clients, including new product reviews, due diligence, as well as the sales practice and supervision issues related to the recommendations and sales of GPB Capital funds and the transactions with investors related to same. If you have any knowledge or experience with these matters, please contact Haselkorn & Thibaut, P.A. at 1-888-628-5590.
GPB Capital Investigation
Over the past year and half, GPB Capital has been investigated by several agencies, including the FBI, SEC, FINRA and State agencies. GPB capital offices were even raided by the FBI. Investors have been overwhelmed with bad news. It started over a year ago when Patrick Dibre, a former business partner of GPB Capital, accused GPB of operating a ponzi-scheme. Here is just a brief timeline:
- GPB’s auditor resigned and withdrew citing excessive risk levels
- GPB halted raising new capital from investors
- GPB suspended investor redemptions
- GPB suspended distribution payments to investors
- Additional litigation in state court in Massachusetts with another GPB Capital business partner included allegations that also cause concern for investors
- 2018 financial filings were delayed by several quarters, and are still not updated
- Massachusetts Division of Securities launched an investigation that included the sales practices by broker-dealer firms and financial advisors selling GPB investments
- The United States Securities and Exchange Commission (SEC) opened an investigation
- The Financial Industry Regulatory Authority (FINRA) opened a regulatory investigation
- The FBI raided the GPB offices in New York
- In June 2019, GPB Capital updated financials (after a lengthy delay) and confirmed (albeit only through 2018) that GPB investors had lost between 25% and 73% of their investment. What’s more, the two largest GPB Capital funds include: GPB Automotive and that was down 39% and GPB Holdings II was down 25%.
- The most recent news last week, that the GPB Capital Chief Compliance Officer hired less than a year ago has been indicted on charges that include obstruction of justice.
Donald S. Wiggins loves learning about business trends. He has 5 years of experience in financial news and worked his way up from a writer to a senior staff member. He is one of the original writers of alphabetastock.com with a goal to increase readership and financial news coverage throughout 2019. Wiggins is the editor and manager of “Services” category.