According to InvestmentNews, alternative asset management company GPB Capital Holdings has notified investors and custodians that its different private placement funds have recently suffered 25-73% losses in value. It’s largest funds, the GPB Automotive Portfolio and GPB Holdings II—together, these two raised $1.27B from investors—have experienced 38% and 25.4% drops, respectively. Such significant losses are clearly not good for investors, who, collectively, have invested about $1.8B in all of the GPB funds.
These private placement funds are invested mostly in waste management and car dealerships and they, along with GPB Capital Holdings, have come under intense scrutiny by both the government and investors. Set up in 2013, the company last year suspended all redemptions involving its funds. An auditing company retained by GPB Capital stepped down in November not long after questions regarding the company’s accounting practices and sales methods arose.
About 60 broker-dealers have sold GPB funds to investors. Advisers usually make a substantial commission for selling the private placements—a typically higher rate than what they’d get for selling mutual funds.
The GPB Capital Funds:
- GPB Holdings I
- GPB Holdings II
- GPB Holdings III
- GPB Automotive Portfolio
- GPB Cold Storage
- GPB Waste Management Fund
- GPB NYC Development
- GPB Holdings Qualified
Private placement investors are typically accredited investors. For a person to qualify as an accredited investor, he /she must have made over $200K for each of the last two years and expect to make the same for the current year—either that or they must have a net worth of over $1M. (Having a spouse modifies the criteria somewhat.) Accredited investors are also typically sophisticated investors who are experienced enough to know the risks and other factors they are taking on when investing in risky securities.
Now, however, there is growing concern that many of the investors who were sold GPB private placements were unaccredited and should have not been sold these investments to begin with. Not only that but Patrick Dibre, an ex-GPB Capital Holdings business partner, is accusing the company of running a Ponzi scam.
GPB Capital Fund Losses Attorneys
Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) has been meeting with GPB investors throughout the US to help them determine whether they have grounds for an investor claim against the broker and/or broker-dealer that sold them these private placements. Just last month, our broker fraud lawyers filed a Financial Industry Regulatory Authority (FINRA) claim against Arkadios Capital and one of its brokers on behalf of a client who lost hundreds of thousands of dollars in retirement funds after the broker recommended that she invest in GPB Capital Holdings. In March, SSEK Law Firm published a list of the different brokerage firms that have sold GPB investments to investors.
If you invested in GPB private placements and believe you were not properly apprised of the risks involved, or you think that these investments may not have been suitable for you, please contact SSEK Law Firm today for your free, no obligation case consultation with one of our GPB investor fraud attorneys.