Stoltmann Law Offices, P.C. has been retained by several investors who have their money locked up in one or more of the beleaguered funds issued by GPB Capital Holdings. Over the last six month, the bad news about GPB Capital has continued to slowly bleed out to the public. The latest news is deeply concerning and could be the most alarming of all red-flags to date. On June 17, 2019, it was reported that Fidelity, through its subsidiary National Financial Services, will no longer allow account owners to hold their GPB Capital interests through National Financial Services. This is huge blow to investors. Here’s what it means.
National Financial Services, which is owned by Fidelity, is one of the largest clearing and custodial firms in the world. Dozens, if not hundreds, of brokerage firms use National Financial Services to maintain custody and to clear client investments. National Financial Services’ main purposes, put simply, are to simply process transactions and present accurate values of the securities and investments account owners hold on account statements. These are back-office intensive jobs for which Fidelity/National Financial Services charge nominal transactional fees. In order to present a value for alternative investments like non-traded REITs, private placements, or in this instance, GPB Capital Funds, some value has got to be communicated to Fidelity so that it can then report that value to account holders. This valuation is based on “net-asset value” or “NAV”. Fidelity decided to boot GPB Capital from its platform and advise countless investors and their financial advisors that they will need to transfer their GPB Fund assets from their existing accounts to another custodial firm within 90 days. Not only does this create a logistical mess for investors and their financial advisors, it really calls into question what GPB Capital is doing and why the company has not provided any values for its various funds to Fidelity. This is a core obligation of any fund – report what its worth to investors!
Fidelity’s decision does not mean GPB Capital funds are worthless. What it means is Fidelity’s patience has worn so thin with GPB Capital that it is kicking it off its clearing and custodial platform. When this latest incident is added to the numerous previous problems with GPB Capital, it can only be looked at as more bad news. Investors should closely consider their options and consider bringing a claim for rescission through FINRA arbitration to get your money back from the brokerage firm that sold these GPB Funds in the first place. It was bad enough GPB suspended distributions and redemptions. Then GPB’s auditor quit. Now Fidelity lacks so much confidence in GPB Capital, Fidelity will not even allow GPB Capital to be held on Fidelity/National Financial Services account statements.
Stoltmann Law Offices, P.C. is actively representing GPB Capital investors in arbitration through FINRA. If you invested in any of the GPB Capital Funds, you should call our Chicago-based law firm to discuss your legal options. We are a contingency fee firm which means we do not get paid until you do!