Fallout from GPB Capital Holdings' $1.7 billion Ponzi-like scheme continued as FINRA fined Dempsey Lord Smith and BD4RIA, Inc. for selling the private placements, more than one year since the SEC first charged GPB and Ascendant Capital with defrauding approximately 17,000 retail investors.
The SEC's 2021 complaint against GPB alleged that GPB and associated sellers misrepresented the product, such as promising investors 8% annualized returns, while using later investors' contributions to pay off earlier investors as GPB struggled to maintain solvency and failed to meet those promises.
Brokers throughout North America unsuitably recommended GPB Capital to investors, some negligently omitting key disclosures such as GPB's risky features, while others were drawn to GPB's high commissions and promises of brokerage income and profit at the expense of clients for whom the product was clearly unsuitable.
In its AWC censuring and fining Dempsey Lord Smith, FINRA wrote that the firm failed to tell investors material information regarding a GPB Capital offering and made unsuitable sales of GPB Capital Securities, while pocketing commissions along the way.
Investigators highlighted an example of Dempsey Lord Smith staff selling $50,0000-worth of GPB Capital's Waste Management product (GPB also sold automotive investments) to an elderly married couple, even though the customers already held two other GPB limited partnership interests so that the additional $50,000 investment caused the clients to exceed the firm's 20% concentration threshold for combined alternative investment holdings.
Some of FINRA's other examples simply concluded that the customer whom Dempsey Lord Smith brokers sold GPB to was not an accredited investor.
BD4RIA, meanwhile, allegedly failed to disclose that GPB had failed to make required financial filings with the Securities and Exchange Commission.
GPB's investment offerings included GPB Automotive Portfolio LP, GPB Cold Storage LP, GPB Holdings LP, GPB Holdings II LP, and GPB Waste Management.
If you invested with a broker or investment adviser at Dempsey Lord Smith, BD4RIA, or at any other FINRA-registered firm who improperly over-concentrated or sold you a risky private placement in GPB Capital Holdings or similar fund that caused financial damages or losses to your portfolio and this recommendation was unsuitable given your investment objective and risk tolerance preferences, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation.