Broker-Dealers and Broker-Dealer Representatives Paid “Steep Commissions to Sell Troubled Private Placements”
Kehoe Law Firm, P.C. is investigating alleged wrongdoing and potential fraud at GPB Capital Holdings, LLC (“GPB Capital”) and its limited partnership funds, as well as David Gentile, GPB Capital’s founder and Chief Executive Officer; William Jacoby, its Chief Financial Officer; Roger Anscher, its Chief Operating Officer and General Counsel; and Michael Cohn, GPB Capital’s Chief Compliance Officer.
On June 24, 2019, InvestmentNews.com reported that “[b]roker-dealers and their reps who sold private placements for GPB Capital were paid tens of millions of dollars in commissions, but now must face clients whose investments have dropped in value dramatically.” InvestmentNews.com also reported that
[a]ccording to a GPB document sent to broker-dealers . . ., GPB raised $1.8 billion from wealthy investors who bought the high-risk private placements from registered reps and their broker-dealers. Collectively, they were paid $167 million in fees and commissions for the transactions. That means brokers and their firms collected 9.3% of the money clients invested into GPB private placements. [Emphasis added.]
An unidentified broker-dealer, according to InvestmentNews.com, “. . . was dismayed by the latest valuations of the private placements by GPB, which acknowledged in March that it was being investigated by the FBI.”
GPB Capital describes itself as a “New York-based alternative asset management firm that seeks to acquire income-producing private companies.” GPB Capital raised more than $1.5 billion in capital held in private limited partnerships that invest primarily in auto dealerships and waste management businesses. Interests in GPB funds were sold through independent broker-dealers, including Arkadios Capital; FSC Securities Corp; Royal Alliance Associates, Inc.; Sagepoint Financial Inc.; and Woodbury Financial Services, Inc.
GPB Capital Accused of “Massive Securities Fraud” in Lawsuit Filed by an Auto Dealer
On July 30, 2019, InvestmentNews.com reported that
[t]he silence emanating from GPB Capital is both maddening and infuriating to the broker-dealers and advisers that sold $1.8 billion in high-risk private placements created by GPB.
The red alert is flashing; GPB recently reported the value of those funds have been decimated, and currently are being valued at $1.1 billion, a decline of almost 40%.
Brokers want answers now, and, according to one executive at a broker-dealer that sold the alternative investment funds, GPB management is not giving any. Instead, GPB is telling the 60 or so firms that sold the private placement and the clients who bought them to wait until September when an audit will be completed for more information about the pricing of their funds.
Until then, brokers and clients can mull over allegations made in a lawsuit this month by a business partner of GPB Capital who claimed that GPB engaged in “serious financial misconduct” and tried to push him out after he complained to the Securities and Exchange Commission, according to a published report. [Emphasis added.]
On July 19, 2019, according to InvestmentNews.com, “. . . a complaint [was] filed in Norfolk Superior Court in Massachusetts . . . by David Rosenberg, chief executive of Prime Automotive Group. He accused GPB of engaging in ‘a massive securities fraud,’ in which it used money from investors to prop up the performance of auto dealerships it owns, as well as to finance payments to other investors.”
Have You Invested in GPB Capital Funds?
If you have invested in either GPB Automotive Portfolio, LP; GPB Cold Storage LP; GPB Eurobond Finance PLC; GPB Holdings II, LP; GPB Holdings III, LP; GPB Holdings Qualified, LP; GPB Holdings, LP; GPB NYC Development, LP; GPB Scientific, LLC; GPB Waste Management, LP (formerly known as GPB Waste Management Fund, LP) and have questions or concerns, please contact either John Kehoe, Esq., (215) 792-6676, Ext. 801, [email protected], or Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, [email protected], [email protected].