An investor in GPB Capital has filed a Financial Industry Regulatory Authority (FINRA) Claim against Arkadios Capital and one of its brokers over losses she sustained to her IRA after she followed the financial adviser’s recommendation to invest in GPB Capital Holdings. Now she is claiming retirement fund losses in the hundreds of thousands of dollars. Our investor fraud law firm, Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) is representing the investor, who hails from the greater Atlanta area, and we have filed a FINRA arbitration claim on her behalf.
GPB Capital Holdings is an alternative asset management firm whose private placement funds are primarily invested in auto dealership and waste management. The firm is under scrutiny by FINRA, the US Securities and Exchange Commission (SEC), Massachusetts Secretary of the Commonwealth William Galvin, and the FBI over its private placements that were sold by dozens of brokerage firms and their brokers.
The GPB private placement sales have raised about $1.8B from investors. Meantime, brokers are said to have earned $100.1M in commissions from these transactions. In August, the firm announced that it was suspending the sale of its private placements to conduct an accounting review.
Many investors have been duped with promises that GPB Capital private placements came with minimal risks. There are widespread allegations, by various regulatory agencies, that unscrupulous brokerage firms and their agents mismarketed the GPB Capital investments as being a relatively safe investment for consumers in general and for retirees. The Massachusetts Securities Division is currently investigating 63 different broker-dealers for widespread mismarketing of GPB private placements. One of those brokerage firms is Arkadios Capital.
The investor claims that while at Arkadios her portfolio became more concentrated in private placements, including the GPB Holdings II Limited Partnership that she was sold.
Private placements, which are very illiquid and high risk, are not for every investor. These are unregistered investments that should only be offered to a limited pool of accredited investors and require a special understanding of said risks. These investments tend to pay larger commissions. Diversification is a key element to any good portfolio, and there are plenty of excellent publicly traded stocks and bonds, with long histories, that can be recommended to investors. Private placements, however, are generally start-ups with little background and information. They are not for everyone, and certainly not appropriate for retirement accounts.
The investor, in her fraud claim, contends that she was “oblivious” to the perils involved with the investment strategy employed by the Arkadios broker. She is alleging the following:
- Unsuitable recommendations
- Due diligence failures
- Gross negligence
- Breach of fiduciary duty
- Grossly inadequate supervision
She also claims that GPB Holdings II Limited Partnership was a particularly bad recommendation for her IRA. Many investors may assume the risk of a placement with the trade-off that it can be offset against gains should it not pan out. Because the recommendation was made for the investor’s IRA, any losses cannot be offset.
In her broker fraud claim, the investor wants Arkadios and its broker to pay damages, with interest, plus related costs.
GPB Capital Holdings Fraud Cases
At Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm), our GPB Capital Holdings fraud lawyers work with investors throughout the US in pursing investment claims against the brokers and their brokerage firms that sold these private placements to them. If you purchased GPB Capital Holdings private placements from an Arkadios broker or a broker from any other broker-dealer, contact SSEK Law Firm today so that we can help you explore your legal options.
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