Already under scrutiny for suspending its sale of private placements, along with redemptions to investors, GPB Capital Holdings now has to explain why its accountant, Crowe LLP, has resigned as the alternative asset management firm’s auditor. GPB Capital had announced a few months ago that it was undergoing an accounting overhaul and that this was why it had failed to submit financial statements for its two biggest funds – the GPB Holdings II and the GPB Automotive Portfolio – to the U.S. Securities and Exchange Commission (SEC) earlier this year. These private placements primarily invest in waste management businesses and car dealerships.
According to GPB Capital CEO David Gentile, Crowe has resigned because of “perceived risks” that the accounting firm felt were outside its “internal risk tolerance parameters.” GPB Capital has since retained EisnerAmper, LLP as its replacement auditor.
Such a significant change at such an important time period should raise significant concerns to those who have invested in GPB Capital Holdings private placement deals. GPB Capital Holdings has at least nine different funds including the two mentioned above (GPB Automotive Portfolio and GPB Holdings II) as well as GPB Holdings III, GPB Cold Storage, GPB NY Development and GPB Waste Management.
Private placements from GPB Capital are known to be high-risk and illiquid, and therefore not suitable for many investors. Nevertheless, these private placements are often sold to investors because they pay brokers a high commission rate. GPB Capital Holdings has reportedly raised $1.5 billion from private placement sales. Up to $800 million of these private placements were sold through independent broker-dealers that, in turn, have made over $100 million in sales commissions.
Dozens of broker-dealers from around the country have sold GPB funds, including several Advisor Group broker-dealers: FSC Securities, SagePoint Financial Services, Woodbury Financial Services Inc., and Royal Alliance Associates.
Over 60 Broker-Dealers Sold GPB Capital Holdings Private Placements to Investors
In September, Secretary of Securities Division of the Commonwealth of Massachusetts, William Galvin, announced that his office was conducting a probe into 63 brokerage firms that sold private placements that came from GPB Capital Holdings. Galvin’s office said that the firms’ sales practices were under review. The state regulator is asking for documents regarding sales activities, marketing materials, and suitability information that may have impacted investors in Massachusetts. While very helpful, Galvin is limited to investigating on behalf of Massachusetts investors, while GPB Capital Holdings’ funds were sold in many other states.
GPB Capital Holdings is also involved in a lawsuit in which it is suing Patrick Dibre, a former business partner. The firm contends that it gave Dibre $42 million in advance for several auto dealerships that were never turned over to the alternative asset management company. Instead, contends GPB Capital Holdings, Dibre told car makers that they should hold back on approving any auto dealers that were owned or run by GPB Capital Holdings because of “alleged malefactions and malfeasance” that the firm contends are untrue.
GPB Capital Holdings Investor Claims
Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) is offering free initial case consultations to investors that sustained losses in any GPB Capital Holdings private placements. You may have grounds for pursuing an investor fraud claim against the party who marketed and sold this highly risky and illiquid investment to you. In addition to potential failures in due diligence, brokerage firms and investment advisory firms have a duty to make sure that the investments they sell to investors are suitable for them and are in the best interests of investors.
GPB Capital Holdings investments, which are risky and complex, are by their very nature only suitable for sophisticated investors willing to take a large degree of risk and who do not need access to their capital, such as institutional investors or accredited investors seeking high risk investments. If you are an investor who has been sold a GPB Capital Holdings private placement, our broker fraud lawyers can help to explore your legal options. Call SSEK Law Firm today.
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