Securities Lawyers Blog
The law offices of Gana Weinstein LLP have previously reported on their investigation into GPB Capital Holdings (GPB Capital) and its dispute with a former business partner Patrick Dibre (Dibre) who allegedly reneged on the sale to GPB Capital of certain auto dealerships causing the fund to lose $40 million according to GPB’s complaint. That litigation is still playing out in court.
GPB Capital has raised an astonishing $1.8 billion in investor money since 2013. However as reported, GPB will stop raising new money for now to focus on accounting issues and financial statements of its two large funds. Subsequent reporting has alerted the public that investors should no longer rely on 2015 and 2016 financial statements and independent accounts’ reports for: GPB Automotive Portfolio, ($622.1 million); GPB Holdings II, ($645.8 million); and GPB Holdings Qualified. Apparently, these accounting revisions are only being made because GPB Capital missed an April 30 deadline to file financial statements with the Securities and Exchange Commission (SEC) which crossed industry thresholds for making such information public more than a year ago.
Investors should be concerned at this point as it is highly unusual for funds’ of this size to cease raising funds unless there are serious concerns. Moreover, delays in reporting financials and the need to release new reports concerning financial statements made three years ago are highly troubling. This suggests potentially multiple years of false information or a size and nature that is currently unknown.
Brokerage firms have been all too willing to subject their clients to the risks of investing in GPB due to the hefty fees the company pays to firms. When GPB Capital’s Automotive portfolio raised a total of $369.2 million from more than 3,800 investors it paid out $43.4 million, or 11.75%, in commissions. 7% of that amount goes directly to the recommending broker’s pocket. There are as many as 60 brokerage firms that sold these funds and among the largest of those firms are Royal Alliance Associates Inc., Sagepoint Financial Inc., FSC Securities Corp. and Woodbury Financial Services Inc.
GPB Capital Holding’s funds include:
GPB Cold Storage
GPB Automotive Fund
GPB Automotive Income
GPB Holdings II and III
GPB Waste Management
GPB NY Development
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests that would make the investment not suitable for investors.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.