GPB Capital Lawsuit August 2019 Update For Investors

GPB Capital Lawsuit August 2019

Here is a quick update on the GPB Capital lawsuit for August 2019.  Since 2013,  a network of over sixty broker-dealers sold $1.8 billion of GPB fund securities as alternative and private placement investments to many main street type investors.  Now, those investors have had a difficult time digesting the events and issues over the past year, including the following:

  • In June 2019, the latest financial reporting indicated a decline in overall valuation by approximately forty percent. Those are still not the most up-to-date valuations.  In addition, that is the overall figure for all funds, some widely held funds reported far more significant declines.  GPB has indicated that it may not be until September 2019 that any further financial valuations are going to be disclosed.
  • In Summer 2018, GPB was restating 2015 and 2016 financial statements for certain funds as part of an accounting review.
  • In September 2018 the SEC served GPB with a subpoena for information.
  • In November 2018 the GPB auditor, Crowe LLP resigned.
  • In February 2019, the FBI made an unannounced visit to GPB offices with a search warrant to collect information.

New GPB Capital Ponzi-like Scheme Allegations

There was of course more, including allegations that GPB Capital was a Ponzi-like scheme alleged in pending litigation in Nassau County, New York.

Now, the latest setback.  In recently filed litigation pending in Norfolk, Massachusetts, there are allegations that GPB engaged in a massive securities fraud using money from investors to prop up the performance of auto dealerships that it owns to finance payments to other investors.

Other allegations of misconduct emanating from that pending litigation include purported fabrication of revenue through the use of fictitious contracts, self-dealing transactions on the part of principals at GPB and undisclosed related party transactions.  The allegations also suggest that the intent was to make it appear to investors that profits from the automotive investments were higher than they actually were and also to purportedly misappropriate investor funds for personal use. 

While GPB has indicated that it denies the allegations and GPB is defending the pending litigation, there is still no explanation being offered for why the $1.8 billion in capital (raised by thousands of unsuspecting main street investors) has declined so significantly and exactly why the auditor resigned last year (not to mention why financials from 2015 and 2016 had to be retracted).

With new allegations raising questions about where the investor’s money has gone, investors want answers now.  The lack of information from GPB now only raises questions about the level of information and due diligence that broker-dealers and financial advisors relied upon when they were recommending these investments to their retail investor clients.

Main street investors relied upon the expertise of those professionals to do the work on the front end to make the right recommendation.  Many investors are also angry over the lack of updates and information as they received little or no information as the above information was coming to light over the past year or so.

What’s Next For GPB Capital?

GPB has indicated that investors will simply have to hold their breath and wait until September 2019 for the next update on the financials.  As the last report in June 2019 left investors with an unexplained decline of 40% (on average and in some cases significantly more), many investors have lost their patience.

GPB Capital Lawsuits

On behalf of clients, we are investigating claims against numerous potential brokerage firms and financial advisors.  We have filed cases against a number of brokerage firms in an effort to recoup damages incurred by our clients. 

While some choose to continue to sit and wait, others are taking action.  Our strategy in these cases is to thoroughly and aggressively dig into each and every transaction at issue for our clients.

By way of background, GPB investments were sold to main street investor clients by brokerage firms and financial advisors as Reg D private placements.  The Financial Industry Regulatory Authority (FINRA) rules require brokerage firms selling private placements to conduct a reasonable investigation into the securities it recommends.

It appears that some brokerage firms may have been negligent in performing this duty.  Brokerage firms and financial advisors must also comply with FINRA rules that require that any recommendation to a customer to invest in a private placement also meet suitability requirements.

We use our background and over 40 years of combined experience on behalf of our clients to help our clients maximize their recovery of damages.  A brokerage firm’s failure to reasonably investigate a private placement such as GPB before selling it to investor clients can result in violations of FINRA rules and state and federal securities laws.

Whether or not brokerage firms should have approved the sale of private placement offerings to investor clients, whether or not those sales were suitable, or as time went on whether or not the brokerage firm should have continued allowing the sales are all areas that we investigate thoroughly on behalf of our clients.  Every brokerage firm also has a duty to supervise its financial advisors, and each financial advisor has responsibilities in each of these transactions. 

In short, our detailed investigation on behalf of every client digs deep into the brokerage firm’s approval of GPB on its sales platform, its continued ongoing approval of the sales, into the details, disclosures, and representations surrounding each and every transaction.  To put it simply, you can rely on us to aggressively represent our clients in these cases.  Our sole focus in each case is to maximize our client’s recovery of damages.   


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