InvestmentNews reports that the Federal Bureau of Investigation is investigating GPB Capital Holdings. The alternative investment management firm said that the FBI stopped by unannounced to its New York offices last week. The visit took place a few months after both the US Securities and Exchange Commission (SEC) and the Financial Industry Regulatory Authority (Finra) launched separate probes into the firm, which claims to have raised $1.8B from accredited, high net worth investors via private placement funds invested in waste management and car dealerships. WealthManagement.com reports that GPB Capital Holdings-sold private placements that are risky, illiquid alternative investments. However, there is growing concern that not all of these investors, were, in fact, sophisticated, accredited, high net worth parties.
In September, Massachusetts Secretary of the Commonwealth William Galvin announced it was investigating 63 brokerage firms for selling GPB Capital Holdings-issued private placements. Among the broker-dealers that sold these investments were Advisor Group firms Sagepoint Financial Inc, Royal Alliance Associates, Inc., Woodbury Financial Services, Inc., and FSC Securities Corp. News of Secretary
Galvin’s probe came just a month after GPB Capital Holdings announced that it was pausing its efforts to raise investor funds to deal with accounting and financial reporting issues involving two of its largest funds, the GPB Holdings II and the GPB Automotive Portfolio, which together reportedly raised almost $1.3B of investor money while paying brokers over $100M in commissions. Both funds missed an earlier deadline to file statements with the SEC.