A new report from InvestmentNews contends that GPB Capital arranged to pay its broker-dealers and representatives tens of millions of dollars in high-priced commissions in exchange for having its reps sell high-risk private placements to clients, resulting in customer losses.
The report states that while clients paid commissions in excess of 9% on about $1.8 billion of risky products, these private placements lost approximately $700,00 in value. GPB recently estimated the value of its seven funds to be $1.1 billion, or just 61% of its initially raised capital.
For instance, whereas customers purchased one such fund, GPB's Armada Waste Management, for $163.4 million, the current estimated value of the fund is $53.4 million—a 67.4% loss. This means that a customer who invested $100,000 in Armada Waste Management now holds a product worth just $32,660.
GPB Capital Holdings is the focus of an active FBI investigation, having previously welcomed FINRA and SEC investigators to its doors in December 2018. And it's not just GPB's Waste Management sector, either.
In February 2018, GPB Capital alleged business partner Patrick DiBre engaged in fraud and conversion in relation to GPB's alternative investments in Grand Central Automotive Partners and other auto dealership products in the GPB Automotive Portfolio, which allegedly paid out as much as 11.75% in sales commissions.
According to InvestmentNews, GPB's high commissions are now burning investors as these high fees and excessive charges are piling on top of GPB's poorly performing private placements and similar complex products, including the aforementioned alt investments.
If you have invested with GPB Capital Holdings or with any firm, broker, or financial adviser whose recommendations to invest in a high-commission and unsuitably risky or complex private placement product has proven harmful to your investments or interests when that product lost value, please call our experienced FINRA arbitration attorneys at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.