Articles Posted in GPB Capital

The investor advocate attorneys at Stoltmann Law Offices, P.C. view the latest news about GPB Capital Holdings as  potentially bad news for investors.  According to published reports, along with the SEC and FINRA, the FBI is now investigating GPB Holdings after an “unannounced” visit to GPB’s New York office last week. According to GPB Capital, along with the FBI, the New York City Business Integrity Commission also paid a visit.

We have written considerably about issues related to GPB Capital Holdings since December 2018 and it seems every month something else happens.  We also have since been retained by investors to pursue claims against the brokerage firms that sold these various GPB Capital funds to them. The one misnomer we continue to see published about clients who invested in GPB Capital Holdings offerings is that these investors were “accredited” or “sophisticated.” These labels are routinely bandied-about whenever an offering like GPB Capital Holdings burns investors.  The fact is, these labels are nothing more than defenses used by the brokerage firms that sell these exempt, private-placement securities to their clients. In fact, an investor usually must qualify as “accredited” to even participate in these offerings as an investor.  According to FINRA Regulatory Notice 10-22 and FINRA Rule 2111, these labels do not obviate the brokerage firm’s obligation to only recommend investments that 1) have been vetted by the firm prior to offering it and that 2) are suitable in light of the client’s investment objectives and risk tolerance. In order for the brokerage firm to adhere to this standard of care, it must satisfy both of these requirements. A brokerage firm cannot rely blindly on the representations made by an issuer like GPB Capital, nor is the disclosure of risks in an offering memorandum sufficient to satisfy the firm’s due diligence obligations which are intended to be gatekeeper in nature.

Our investigation has revealed that NewBridge Securities, FSC Securities, Cetera Advisors, Royal Alliance, and a cacophony of other FINRA registered brokerage firms sold investors units or shares in various GPB Capital offerings. If you were sold investment in any of the GBP Capital offerings and wish to know your legal options, please call 312-332-4200 for a no obligation free consultation with an attorney. Stoltmann Law Offices is Chicago-based  contingency fee firm which means we do not get paid until you do.

GPB Capital, a New York-based private equity firm and manager of several private placement funds, announced last week that the auditor of its funds’ financial statements, Crowe, LLP, had resigned. According to an article published by Investment News on November 14, 2018, Crowe walked-away from performing audits on GPB’s two largest funds amid concerns about “risks that Crowe determined fell outside of their internal risk tolerance parameters.”  This decision by the auditor to resign, as opposed to performing the audits, is a red-flag that these funds were, at a minimum, using investor money in a way that fell outside the express limitations or disclosures contained in the fund offering materials.

This latest news about GPB Capital comes on the heels of previous announcements to investors that it was suspending redemptions, meaning it was no longer honoring investor requests to pull  money out which is alarming, was restating its financials for 2015 and 2016, and was delaying filing its 2017 financials.

GPB Capital created several private placement funds in 2013 including the GBP Holdings, LP, GPB Holdings II, LP, GPB Automotive Portfolio, LP, and the GPB Waste Management Fund, LP. These fund are all “private placements” meaning they are registered with the Securities and Exchange Commission as being “exempt” from registration under SEC Rule 506. Being exempt from registration means the funds can raise capital from investors, but only those that are “qualified” or “accredited.”

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