The GPB Capital share price saga continues to get worse for investors. The most recent announcement from GPB Capital is that its two largest investment funds (GPB Holdings II and GPB Automotive Portfolio) are now reporting substantial declines in the value of 25.4% and 39%, respectively.
GPB Capital Investigations
Given what has transpired over the past year, investors in these two funds and those investors with any material exposure to GPB Capital investments should view this most recent report with great scrutiny. Over the past year, the GPB Capital story has not been a very positive one for investors. Multiple regulatory agencies have initiated fraud GPB Capital investigations, there have been allegations of falsified financial statements, the GPB Capital auditors were terminated, allegations of bogus financial data have been raised and that’s not all as pending litigation involving a former executive includes numerous troubling allegations including a reference to GPB being a Ponzi scheme.
Why and how do so many public investors own so much GPB Capital?
Make no mistake, GPB Capital private placements were marketed to public investors in most cases through professional financial advisors who earned commissions as high as 8% in selling these investments to unsuspecting public investors. So the answer is quite clear in many cases, it was greed.
As the bad news unfolded over several months, many of the professional investment advisors who recommended the GPB investments (and their firms that supervised those transactions failed their public investor customers yet again when they recommended that those investors ignore the negative information (some even failed to update their clients regarding the material developments) and then they recommended their public investor client continue to “hold” these investments.
Now, it appears the proverbial other shoe has dropped. GPB has recently reported that its two largest investment funds have suffered substantial declines in value. As a result, GPB certainly has its problems, some of which are becoming clearer, band the broker-dealer firms, as well as the professional financial advisors who were responsible for the due diligence, the monitoring, the reporting, the recommendations also now, appear to have their share of problems as well.
It appears for some public investors, even now when they are trying to move away from the firms and advisors who are responsible for the flawed due diligence, negligent monitoring, unsuitable or inappropriate recommendations, and negligent supervision, they are stuck in some cases. Some financial institutions such as Fidelity Investments appear to have refused to accept GPB securities via transfer from other broker-dealer firms and have begun discussing whether to remove GPB investments from their platform.
With up to 60 independent broker-dealer’s firms and thousands of professional financial advisors selling GPB investment funds over the past several years, the net effect here could be a massive loss for public investor customers all over the country. Well-known broker-dealer firms including Sagepoint Financial, Dawson James, and Woodbury Financial have marketed and sold the GPB investments to their clients.