FINRA and SEC Launch Investigation of GPB Capital Holdings

Attorney Advising Disclaimer

Two months after Massachusetts regulator William Galvin began investigating GPB over its illiquid, high-risk, and high-commission alternative investment sales, FINRA and SEC personnel have taken up the cause, according to an InvestmentNews report.

According to InvestmentNews, the SEC's focus concerns disclosures made to investors (and whether such disclosures were accurate), fund performance, and distribution of capital to investors.

In February 2018, GPB accused former business partner Patrick DiBre of illicitly converting a series of auto dealership-related alternative investments, exposing investors who purchased alt investments from GPB to DiBre's allegedly fraudulent scheme. Affected entities included GPB Automotive Portfolio LP and Grand Central Automotive.

The alleged misappropriation by DiBre featured additional charges of of self-dealing, price manipulation, and withholding funds to prevent GPB from making targeted distributions to its fund investors—which is one of the areas of concern featured in the SEC's investigation.

GPB's business was apparently so shaky that in November, an auditor "walked away" from GPB Capital after finding risks that the auditor deemed "fell outside of [its] internal risk tolerance parameters."

Citing $43.4 million (or 11.75%) in commissions payments, plus other costs and fees, InvestmentNews previously described GPB's high-risk and illiquid alternative investment business thusly: "the private placements are expensive."

Add in a few "bad acts," as GPB alleged of DiBre, and the already-costly GPB private placements just got a lot more expensive.

If you have invested in the GPB Automotive Portfolio or another such GPB Capital Holdings product as the result of a broker's unsuitable recommendation of an illiquid, high-risk alt investment in contravention of your conservative or moderate risk tolerance or investment objectives, incurring losses or other damages as a result of this ill-fated investment, call The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.

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