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May 23, 2019

Brokerage Firms May Be Responsible for Selling GPB Capital Funds

GPB Capital Holdings, an alternative asset management firm based in New York, is the subject of investigations by FINRA, U.S. Securities and Exchange Commission (SEC), and state regulators. GPB Capital raised approximately $1.8 billion from investors in private placement funds primarily invested in the waste management and auto dealership sectors. The company is amid a quagmire of legal problems.

In April 2018, the GPB Capital failed to file financial statements with the SEC for two of its largest funds, GPB Holdings II and GPB Automotive Portfolio. In August 2018, the company announced the decision to stop taking in new investments and to suspend redemption of all its funds until the filings were completed and audited financial statements released. The GPB Capital funds include:

  • GPB Automotive Portfolio
  • GPB Cold Storage
  • GPB Holdings II
  • GPB Holdings III
  • GPB Holdings Qualified
  • GPB NYC Development
  • GPB Waste Management Fund

Investment News reported earlier this month that GPB Capital had still not made the appropriate financial disclosures to regulators.

GPB Capital is also amid a private lawsuit with a former business partner, Patrick Dibre, over a $40 million sale of auto dealerships. In a countersuit filed in the New York State Supreme Court, Dibre alleged that GPB Capital was operating a “complicated and manipulative Ponzi scheme”.

The brokerage firms that sold GPB Capital funds have been accused of falsely marketing the private placements as relatively safe and recommending them to investors for whom they were not suitable. In March, an investor in GPB Automotive Fund, L.P. filed a claim with FINRA against Newbridge Securities, a broker dealer based in Boca Raton, alleging that her financial advisor at Newbridge made misrepresentations and omissions of material fact in connection with her investment. Last month, two additional claims were filed by investors in GPB Capital funds against brokerage firms with FINRA. One case was filed against Arkadios Capital, a broker-dealer and advisory firm based in Atlanta, and its CEO. The other was filed against SagePoint Financial Inc., a broker-dealer based in Maricopa County, Arizona.

Private placements are high risk investments that are not suitable for many investors. Investors in the GPB Capital funds have limited options to recoup their investments because they cannot redeem their investments. Holding a brokerage firm or financial advisor who made an unsuitable recommendation may be an investor’s only option.

If you are concerned about an investment in a GPB Capital Holdings fund or other private placement and want to discuss your options, please call the Costello Law Group at 410-832-800 (or Toll Free 877-418-0003) for a free consultation.

The Costello Law Group specializes in securities fraud and securities arbitration and represents investors across the nation.