In many cases, investors are arguing that the brokerage firms who sold GPB to them failed to do adequate due diligence and/or overconcentrated their accounts in GPB.
Silver Law Group has filed arbitration claims on behalf of clients who invested in GPB, including the first against Advisor Group broker-dealer SagePoint Financial, which requests $400,000 in damages.
GPB’s Private Placements
GPB Capital Holdings buys companies like auto dealerships with the money it raises by having financial advisers sell “private placements” to investors. Private placements involve significant risk, are illiquid, and are not suitable for many investors’ goals. But they were appealing to many investors because of the high return they were supposed to pay. Brokers liked the substantial commissions they were paid for selling GPB
Silver Law Group’s managing partner, Scott Silver, recently spoke to InvestmentNews.com about the broker-dealers that sold GPB:
“There was a lack of due diligence. Clients were assured that the assets were strong, their principal was secure and the private placements would provide an income stream for years to come,” Silver told the site.
The reality of owning GPB has turned out quite differently from what investors were told it would be.
GPB Capital Facing Serious Issues
GPB is under investigation by multiple federal and state agencies, their offices were raided by the FBI, and there is speculation that the company is a Ponzi scheme. In December 2018 they stopped paying distributions to investors.
In June 2019 the news got even worse as the troubled company reported that the value of its two biggest investment funds, GPB Holdings II and GPB Automotive Portfolio, have declined by 25% and 39%, respectively. GPB Holdings II and GPB Automotive Portfolio raised $1.27 billion from investors, most of the $1.5 billion that independent broker-dealers sold to investors as private placements.
The other five GPB funds also have significant declines in value, according to the company. Even at the reduced valuations, GPB investors have no willing buyers and are forced to hold and risk further reductions in price.
Recovering GPB Losses Through FINRA Arbitration
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 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 ssilver@silverlaw.com or toll free at (800) 975-4345.