Securities Fraud Investigation into GPB Capital Raises Retail Investor Concerns

February 03, 2020

By Paul Vorndran. 

The private equity firm GPB Capital Holdings LLC remains under investigation for sales practices used in financing its acquisitions of automotive dealerships, The Wall Street Journal reported. GPB Capital Holdings sold illiquid, high-commission alternative investments through independent broker-dealers in two funds, GPB Automotive Portfolio and GPB Holdings II.

The funds collectively raised over $1.2 billion, InvestmentNews reported, sold through 60+ broker-dealers. While broker-dealers can sell private placements to wealthy, accredited investors and institutions, selling to unaccredited investors may constitute securities law violations. The minimum investment in GPB Automotive Portfolio was $100,000.

News of a broader investigation into sales practices and due diligence at GPB Capital by the United States Securities and Exchange Commission, Financial Industry Regulatory Authority (FINRA), and the Federal Bureau of Investigation broke after the State of Massachusetts Division of Securities launched an investigation into GPB Capital in September 2018.

Embroiled in the ongoing investigations are the 60+ broker-dealer firms involved in the sales of private placement alternative investments in GPB Capital to investors. Investors reeling from losses in GPB are in the process of assessing their options or engaging in legal proceedings to recover what they can, either through private arbitration or court filings against the broker-dealer firms and financial advisors that recommended GPB.

The critical issue in these cases is whether GPB Capital sold to average retail investors–many retirees–that were unaware or mislead by marketing and solicitation materials about the risks of GPB investments. Sales of private placement investments by independent broker-dealer firms have been an ongoing source of harm to unaccredited, retail investors.

If you incurred investment losses in GPB Capital Holdings and its related funds and would like your case evaluated, please contact Securities Litigation Attorney Paul Vorndran.

This communication is provided for your information only and is not intended to constitute legal advice or legal opinion as to any situation. You should not take, or refrain from taking, any action based on information in this article, without seeking legal counsel from an attorney on your particular facts and circumstances. Jones & Keller would be happy to provide you with specific advice about specific situations, if desired. Do not hesitate to contact us.