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.