GPB Capital Holdings, LLC is accused by Massachusetts securities regulators of violating state laws by misleading investors about its finances. GPB is now the subject of an administrative enforcement action from the Massachusetts Secretary of the Commonwealth Securities Division.
The action against the troubled New York-based alternative asset management firm was announced on May 27, 2020 and comes after GPB took in more than $14 million from over 180 investors in the state.
GPB raised at least $1.3 billion by paying high commissions to broker-dealers such as Sagepoint Financial for selling private placements in GPB’s funds to investors who were promised high dividend payments in return for their investment.
The Massachusetts Securities Division’s complaint alleges that GPB misled investors about its finances when it wasn’t making enough money to pay dividends, and also concealed its self-dealing.
The enforcement action, in which GPB Capital is “Respondent”, concerns alleged violations of the Massachusetts Uniforn Securities Act (the Act) and Massachusetts code regulations (“the Regulations”) and, among other points, seeks an order:
- “requiring Respondent to permanently cease and desist from further conduct in violation of the Act and Regulations”
- “requiring Respondent to provide a verified accounting for those losses attributable to the alleged wrongdoing;”
- “requiring Respondent to make offers of rescission to all residents of the Commonwealth who purchased securities sold in violation of the Act;”
- “requiring Respondent to disgorge all profits, direct or indirect compensation, and remuneration received in connection with the alleged wrongdoing;”
- “taking any such further action which may be in the public interest and necessary and appropriate for the protection of Masachusetts investors.”
GPB Capital Background
GPB Capital was founded in 2013 by CPA and Scientologist David Gentile. The company stated that it would provide a return to investors by purchasing income-producing companies such as auto dealerships, waste management companies, and other businesses.
Though a private placement investment in GPB’s funds was illiquid, meaning that it could not be easily sold, investors were drawn to the high dividend they were promised. Unfortunately for investors, GPB stopped making dividend payments in 2018 and there have been a series of negative developments, including:
- A former partner accuses GPB of being a Ponzi scheme.
- GPB’s Chief Compliance Officer and Managing Director was criminally indicted for obstruction of justice.
- The FBI raided GPB’s New York offices.
- GPB announced that the value of its two biggest funds, GPB Holdings II and GPB Automotive Portfolio, had declined by 25% and 39%, respectively.
- GPB is under investigation by the Securities and Exchange Commission (SEC), and other state and federal regulators.
- GPB is the subject of class action lawsuits.
The enforcement action by Massachusetts Securities Regulators is just the latest bad news for GPB Capital and its investors. Due to the illiquid nature of GPB private placements, investors have no choice but to hold and risk further loss in value of their investment.
For many investors, the best option to recover GPB losses is to file a FINRA arbitration claim against the broker dealer that sold them GPB. Silver Law Group has filed FINRA arbitration claims on behalf of GPB investors.
Contact Silver Law Group If You Invested In GPB Capital
Silver Law Group is a nationally-recognized investment fraud and securities arbitration law firm with experience recovering losses for investors through FINRA arbitration. Our GPB attorneys have filed FINRA or securities arbitration claims in California, Florida, Michigan, and more.
Scott Silver, Silver Law Group’s managing partner, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors nationwide and internationally in securities investment fraud cases. If you have investment losses, contact Scott Silver for a no-cost consultation to discuss your options at email@example.com or toll free at (800) 975-4345.