Two investors in GPB Capital Holdings have filed a class action lawsuit against the troubled company.
The complaint, filed in Manhattan federal court, alleges that GPB breached its fiduciary by failing to give investors its annual audited financial statements.
This lawsuit is just the latest problem for GPB, which was recently sued by one of its partners, who accused the company of operating like a Ponzi scheme. The company is also the subject of investigations by the FBI, SEC, FINRA, and New York’s Business Integrity Commission.
GPB Funds Decline Significantly In Value
If the other problems weren’t enough, in June 2019 GPB reported that the value of its two biggest investment funds, GPB Holdings II and GPB Automotive Portfolio, had declined by 25% and 39%, respectively.
The company says its other five funds also have significant declines in value.
Illiquid Private Placement In GPB Is Unsellable
GPB has been an absolute nightmare for investors. Unfortunately, even with all its problems, investors have no one to sell to and are forced to hold and risk further reductions in price.
Of course, investors never expected it to be like this. Though a private placement in GPB was illiquid, investors were lured in by the high monthly distributions they paid. GPB stopped paying distributions in December 2018. GPB now claims that many investors have already received a return of some of their principal because the dividends were not from the profits earned by GPB but a return of capital by GPB after it took out commissions, fees costs and other expenses.
Many brokerage firms are trying to distance themselves from the deal claiming that investors should have known that the investment was speculative or high risk. However, investors counter this is illogical since GPB was promoted as paying a dividend and not as an investment which could potentially produce a substantial return.
Silver Law Group Represents Investors In Claims Against Brokerage Firms To Recover GPB Losses
If you purchased GPB Capital, you may have a claim to recover your money. Broker-dealers have an obligation to recommend suitable investments to their clients and perform due diligence into the products they sell them. FINRA-registered brokers and firms are subject to arbitration to resolve securities-related disputes.
Silver Law Group has filed arbitration claims against broker-dealers who sold GPB, including SagePoint Financial.
Silver Law Group represents the interests of investors who have been the victims of investment fraud. Scott Silver is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors nationwide in securities investment fraud cases. Please contact Scott Silver of the Silver Law Group for a free consultation at firstname.lastname@example.org or toll free at (800) 975-4345.