Securities Fraud and Mismanagement

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GPB Capital Loss Recovery

Investors of GPB Capital, please call 1-866-817-0201 about potential loss recovery.  Initial consultations are free and confidential.  Jeffrey Pederson is a private attorney who has successfully represented investors nationwide in obtaining settlements or judgments for investment losses.

Information exists to support that GPB Capital was inappropriately sold by independent brokerage firms across the country.  These investments are now illiquid and essentially worthless.

These brokers were paid commissions in excess of 9% per trade to push this investment.  This means the investment needs to return 9% before the investment makes any profit – in many cases, the investor never received a return that covered the commission.  The 9% commission also means the broker increases his own pay nine to eighteen-fold, since the average broker commission on a stock trade is less than one percent.

Investing in GPB contained perils unknown to investors.

GPB was an investment investors could not easily monitor or research. So most trusted their brokers.

Worse, the brokers selling this investment violated their duties to investors in addition to obtaining this heightened commission.

Brokerages have duties to investors in the sale of investments such as GPB.  These investments were high-risk, and brokerage were only allowed to recommend the investments to investors.

Investigation into the investment prior to sale was also a duty of the broker.  Such due diligence to ensure that a company is actually making the money represented is a basic duty of brokers and brokerage firms.

On August 17, 2018, GPB halted sales new sales to review accounting.  The purported reason was to “integrate the high volume of recent acquisitions.”

On August 24, 2018, GPB announced that it will restate its 2015 and 2016 financial statements.  The adjustments were errors in income recognition that came to light in audits.

On September 12, 2018, Massachusetts Secretary of State William Galvin launched an investigation into the sales practices of independent broker-dealers in connection with private placements that are sponsored by GPB Capital Holdings.

The Massachusetts Securities Division has information about one independent firm’s sales practices in connection with GPB sales, coming in the wake of GPB’s announcement that GPB has temporarily stopped bringing in new funds.  It has also suspended redemptions while it concentrates on accounting and financial reporting.

In addition, there is an issue with the failure to file financials.  Two private GBP investments that are required because of their size to file financial statements with the Securities and Exchange Commission failed to meet filing deadlines.

These matters have led to a sweep by regulators of 63 broker-dealers that sell GPB, with the regulators requesting data on the extent of sales activity in Massachusetts, disclosure and marketing documents that the firms provide to investors on the solicitations and data on investor suitability.

“While my Securities Division’s investigation is in the very nascent stages, recent activity within GPB raises red flags of potential problems. These red flags, coupled with the fact that sales of private placements by independent broker-dealers have been an ongoing source of investor harm, have led to this investigation,” Galvin, the lead regulator, stated.

Galvin goes on to state, “I must also express my serious concerns regarding the expected proposal by the SEC to expand who can participate in private securities offerings. Without a strong fiduciary rule to prevent sales practice abuses, it is utter folly not to know that main street investors will be hurt.”

One fund in particular stands out as particularly bad is GPB’s Armada Waste Management.  The current estimated value of the fund is $53.4 million. That means Armada Waste Management has declined in value 67.4%.

As of November 2019, GPB Capital Holdings LLC faces renewed allegations of fraud by a Massachusetts auto executive whom the alternative asset manager forced from his leadership role earlier this year.

The executive, in an updated complaint filed in Superior Court in Massachusetts, claims GPB engaged in fraudulent activities to finance its acquisitions of auto dealerships, including the Prime Motor Group controlled by his family and which he led. In raising more than $1.5 billion from investors, he claims the firm “engaged in a massive securities fraud.”

Firms selling GPB Capital include, but are not limited to, the following: Avere Financial Group (Parsonex Capital); Arkadios Captial; Ausdal Financil Partners; BCG Securities; Benjamin & Jerold Brokerage; Colorado Financial Service; Cabot Lodge Securities; Calton & Associates; Cape Securities; Capital Investment Group; Center Street Securities; Coastal Equities; Concorde Investment Services; Crystal Bay Securities; Emerson Equity; Geneos Wealth; McNally Financial Services;  Kalos Capital; IBN Financial; Crown Capital; National Securities Corp. (NSC); Orchard Securities; Pariter Securities; Sandlapper;  Vestch; Stephen A. Cohn; Hightower Securities; Innovation Partners;  Kingsbury Capital; Sentinus; David Noyes; Dawson James; Dempsey Lord; DFPG Investments; FSC Securities; Woodbury Financial Services; Sagepoint Financial; Triad Advisors; Moloney Securities; and Madison Avenue Securities.