Securities Lawyers Blog
According to a compliance officer with Purshe Kaplan Sterling Investments, Inc., (Purshe Kaplan) the firm continued to sell securities offered by GPB Capital Holdings (GPB Capital) after she had reported misgivings as to the entities business model and recommended that the firm not sell the product. According to court documents, the compliance officers responsibilities included reviewing new product offerings, regulatory disclosures, and conducting monthly and quarterly compliance reviews among other duties.
In January 2016, the compliance officer raised concerns about GPB Capital and did not recommend that the product be added to the Purshe Kaplan platform based upon her finding that members of senior management at the sponsor of the product were using investor funds for personal business interests. However, Purshe Kaplan dismissed her concerns and re-reviewed GPB Capital without the compliance officer’s input. Further, Purshe Kaplan instructed the compliance officer not to raise concerns about the product before it was offered to purchasers. Moreover, it was alleged that less experienced personnel were given the role to evaluate GPB Capital. If these allegations are true Purshe Kaplan may have intentionally withheld material information from all of its investors concerning GPB Capital.
One private placement that a large number of clients of Purshe Kaplan were sold is GPB Capital related investments. GPB Capital is facing multiple accusations of being a Ponzi scheme, an ongoing U.S. Securities and Exchange Commission (SEC) and FBI investigations, and even GPB’s chief compliance officer being indicted for illegally obtaining information on the SEC’s investigation. Now even Volkswagen and Toyota are threatening to pull the plug on GPB Capital auto dealerships. While advisors have been telling investors to do absolutely nothing and just hang in there – this is nothing more than just additional poor advice. In November 2019 GPB Capital’s admitted that no financial audit would occur anytime in the near future. In sum, investors now know there is nothing to hang onto. By the day, advisor recommendations to do nothing appear to be completely self-serving, out of the loop, and not in the interest of the investor.
Our firm has analyzed the GPB Capital offerings and believe that brokerage firms did not review GPB Capital offerings in any significant detail. Any serious due diligence would have revealed that GPB Capital was a dubious offering destined to fail. In complaints filed with The Financial Industry Regulatory Authority (FINRA) our clients have alleged that GPB Capital’s scam was highly predictable and easy to spot. Nearly every aspect of the offering raised unanswerable questions from GPB Capital’s senior management, fantastical business claims, and intra-fund lending practices.
GPB Capital Holding’s funds include:
GPB Cold Storage
GPB Automotive Fund
GPB Automotive Income
GPB Holdings II and III
GPB Waste Management
GPB NY Development
DDPs include products such as non-traded REITs, oil and gas offerings, equipment leasing products, and other alternative investments. These alternative investments virtually never profit investors and are almost always unsuitable for investors because of their high fee and cost structure. Brokers selling these products are paid additional commission in order to hype these inferior quality investments providing a perverse incentives to create an artificial market for the investments.
Brokers have a responsibility treat investors fairly which includes obligations such as making only suitable investments for the client after conducting due diligence. Due diligence includes an investigation into the investment’s properties including its benefits, risks, tax consequences, issuer, history, and other relevant factors. Appropriate due diligence would identify that an alternative investment’s high costs, illiquidity, and conflicts of interests that would make the investment not suitable for investors. Investors often fail to understand that they have lost money until many years after agreeing to the investment. In sum, for all of their costs and risks, investors in these programs are in no way additionally compensated for the loss of liquidity, risks, or cost.
Investors who have suffered losses are encouraged to contact us at (800) 810-4262 for consultation. At Gana Weinstein LLP, our attorneys are experienced representing investors who have suffered securities losses due to the mishandling of their accounts. Claims may be brought in securities arbitration before FINRA. Our consultations are free of charge and the firm is only compensated if you recover.