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.