Recovering Investment Losses Related to GPB CAPITAL HOLDINGS

Investors in various private placement securities offered by GPB Capital Holdings (GPB) may have claims to recover their losses. GPB is a New York-based alternative asset management firm. GPB’s business model is focused on the acquisition of income-producing private companies primarily in the automotive retail and waste management sectors. Publicly available information indicates GPB has raised approximately $1.8 billion in investor equity.

GPB’s funds include the following private placement offerings:

  • GPB Automotive Portfolio, LP

  • GPB Waste Management, LP (f/k/a GPB Waste Management Fund, LP)

  • GPB Cold Storage, LP

  • GPB Eurobond Finance PLC

  • GPB Holdings, LP

  • GPB Holdings II, LP

  • GPB Holdings III, LP

  • GPB Holdings Qualified, LP

  • GPB NYC Development, LP

  • GPB Scientific, LLC

Take GPB Automotive Portfolio, LP, for example. According to publicly available information, this GPB fund raised approximately $622 million from over 6,000 investors through a private placement offering governed by Regulation D (Reg D) of the Securities Act of 1933. And GPB Holdings II, LP raised more than $645 million from over 6,000 investors, also through a Reg D private placement offering.

Unregistered securities offered through private placements, such as these GPB funds, are by their very nature risky. In fact, such inherently risky investments are only suitable for sophisticated investors who understand their risks and can afford to lose the entire principal of their investment. Investors in private placements typically only receive very limited information about the investment, including its financials. Whereas publicly traded stocks are required to be registered, and accordingly must meet stringent registration and reporting requirements set by the SEC, private placements are not subject to the same regulatory oversight. For this reason, the prevalence for fraud or related misconduct is heightened when it comes to private placement investments.

Generally, some private placements only provide unaudited financials, or overly optimistic growth forecasts. Due diligence reports that were prepared by third parties hired by investment sponsors are not uncommon. Private placements are also typically highly illiquid investments and cannot be readily resold.

Public information indicates many GPB investors were retail investors who were solicited to invest in one or more GPB funds upon the recommendation of a stockbroker or financial advisor. An investigation by securities regulators in 2018 suggests that investors in certain GPB funds paid around 8% of invested capital as fees and commissions to brokerage firms marketing these private placements.

Brokerage firms must conduct due diligence on investments recommended to clients. Financial advisors have an affirmative duty to disclose the risks associated with a particular investment product, as well as to conduct a suitability analysis to determine if an investment meets an investor’s stated objectives and risk profile.

Public information lists the following broker-dealers as having been authorized to sell GPB funds to their customers:

  • Accelerated Capital Group

  • Advisory Group Equity Services, Ltd.

  • Aegis Capital Corp.

  • Aeon Capital, Inc.

  • American Capital Partners, LLC

  • Arete Wealth Management, LLC

  • Arkadios Capital

  • Ascendant Alternative Strategies, LLC

  • Ausdal Financial Partners, Inc.

  • Avere Financial Group, LLC

  • Axiom Capital Management, Inc.

  • BCG Securities, Inc.

  • Benjamin & Jerold Brokerage I, LLC

  • Cabot Lodge Securities, LLC

  • Calton & Associates, Inc.

  • Cape Securities, Inc.

  • Capital Financial Services, Inc.

  • Capital Investment Group, Inc.

  • Cascade Financial Management, Inc.

  • Center Street Securities, Inc.

  • Coastal Equities, Inc.

  • Colorado Financial Service Corp.

  • Concorde Investment Services, LLC

  • Crown Capital Securities, L.P.

  • Crystal Bay Securities, Inc.

  • D.H. Hill Securities, LLLP

  • David A. Noyes & Company

  • Dawson James Securities, Inc.

  • Dempsey Lord Smith, LLC

  • Detalus Securities, LLC

  • DFPG Investments, Inc.

  • Dinosaur Financial Group, LLC

  • Emerson Equity LLC

  • Financial West Group

  • FSC Securities Corp.

  • Geneos Wealth Management, Inc.

  • Great Point Capital, LLC

  • Hightower Securities, LLC

  • IBN Financial Services, Inc.

  • Innovation Partners LLC

  • International Assets Advisory, LLC

  • Investment Architects, Inc.

  • Kalos Capital, Inc.

  • Kingsbury Capital, Inc.

  • Landolt Securities, Inc.

  • Lewis Financial Group, L.C.

  • Lion Street Financial, LLC

  • Lowell & Company, Inc.

  • Madison Avenue Securities, Inc.

  • McDonald Partners LLC

  • McNally Financial Services Corp.

  • Moloney Securities Co., Inc.

  • Money Concepts Capital Corp.

  • MSC – BD LLC

  • National Securities Corp.

  • Newbridge Securities Corp.

  • Orchard Securities, LLC

  • Partier Securities, LLC

  • Private Client Services, LLC

  • Purshe Kaplan Sterling Investments

  • Royal Alliance Associates, Inc.

  • Sagepoint Financial, Inc.

  • Sandlapper Securities, LLC

  • SCF Securities, Inc.

  • Sentinus Securities, LLC

  • Silber Bennett Financial, Inc.

  • Stephen A. Kohn & Associates, Ltd.

  • Triad Advisors, LLC

  • Uhlmann Price Securities, LLC

  • United Planners’ Financial Services of America, LP

  • Vanderbilt Securities, LLC

  • Vestech Securities, Inc.

  • Western International Securities, Inc.

  • Westpark Capital, Inc.

  • Whitehall-Parker Securities, Inc.

  • Wilmington Capital Securities, LLC

  • Windsor Street Capital, LP

  • Woodbury Financial Services, Inc.

Giarrusso Law Group LLC represents investors nationwide in securities arbitration, securities litigation, and select consumer financial litigation matters. We recognize that each client’s case is unique, and therefore provide sound and thoughtful representation tailored to each case to obtain the most favorable outcome. To learn more about your rights and potential recovery options related to GPB funds, please contact us by telephone at (201) 771-1115 or by email at info@gialawgroup.com for a no-cost, confidential consultation.

 

GPB CAPITAL HOLDINGS Investment Loss Timeline

March 2013

GPB is formed by CEO David Gentile and purports to be an alternative asset management firm that adheres to a private equity structure for its investment capital. GPB establishes several investment funds organized as limited partnerships.

April 2018

GPB misses its deadline to file certain required audited financial statements with the SEC. The financial statements were to be filed for two funds: GPB Automotive Portfolio, LP and GPB Holdings II, LP. GPB informs various broker-dealers that the funds would temporarily halt accepting any new investor capital, and further, would stop redemptions on any investor shares until completion of an audit to overhaul and restate prior financials.

September 2018

Securities regulators in Massachusetts formally announce an investigation into, among other things, the sales practices employed by various brokerage firms soliciting Massachusetts investors to invest in GPB funds. 

November 2018

GPB’s auditor, Crowe LLP, formally resigns. Crowe previously had suspended work relating to GPB management’s ongoing audit aimed at overhauling and restating prior financials. GPB replaces Crowe with EisnerAmper LLP.

December 2018

FINRA and the SEC launch investigations into GPB.

February 2019

The FBI makes an unannounced visit to GPB’s offices.

June 2019

GPB reports significant declines in value for two GPB funds, including a loss of 39% on GPB Automotive Portfolio, LP and 25% on GPB Holdings II, LP.  Other GPB funds report losses ranging from 25% to 73%. Reported regulatory assets under management are approximately $238.6 million, representing a $45.2% drop from $434.3 million at the end of 2017. (These regulatory assets under management do not include all assets of certain GPB-managed companies.)

August 2019

Two investors in certain GPB Funds are named as lead plaintiffs in a class action lawsuit brought against GPB as well as certain GPB funds and GPB executives. Among other things, the plaintiffs seek to compel GPB to comply with its obligation to provide timely and accurate financial statements given reported accounting irregularities.

October 2019

The Chief Compliance Officer of GPB Capital Holdings, LLC, Michael S. Cohn, is charged with obstruction of justice, unauthorized computer access, and unauthorized disclosure of confidential information. Mr. Cohn, a former SEC compliance examiner, is alleged to have provided information about an SEC investigation into GPB while he was engaged in talks with GPB about potential employment with the firm.

November 2019

In a letter to investors, GPB announces that it will not meet a previously communicated commitment to provide investors with audited financials for two of its funds by year-end.

May 2020

The Massachusetts Secretary of the Commonwealth, whose office oversees regulation of securities, files a civil fraud complaint against Prime Automotive Group, majority-owned by GPB, alleging violations of securities laws after an investigation determines that the company issued marketing materials to Massachusetts investors containing material misstatements and omissions.

September 2020

Former Chief Compliance Officer Michael S. Cohn pleads guilty to theft of government property, in federal court in Central Islip, NY.