Peiffer Wolf Carr & Kane | Securities Law Firm Investigation
The Securities Law Firm of Peiffer Wolf Carr & Kane (“PWCK”) is investigating the sales practices and due diligence of Financial Industry Regulatory Authority (“FINRA”) broker-dealers who sold the private placement securities of GPB in the form of notes.
Furthermore, the notes that were sold are considered private placement, or non-traditional, investments that are not registered with the SEC. These inherently risky investments are often only suitable for sophisticated investors. However, many brokerage firms and financial advisors still sell these products because they offer higher commissions.
According to an August 2018 news report, GPB notified investors that they should no longer rely on 2015 and 2016 financial statements and reports. The CEO of GPB, David Gentile, disclosed that “certain material weaknesses in internal controls exist.” This disclosure followed an internal accounting review, freezing monthly interest payments.
GPB Capital Struggles
In July 2017, GPB entered litigation against a former business partner who allegedly reneged on a sale of multiple car dealerships. GPB sought the return of $42 million it had paid to the former business partner. As the lawsuit continues, additional problems for GPB have begun to surface:
- April 2018: GPB failed to produce audited financial statements;
- August 2018: GPB announced no new investor capital would be accepted;
- September 2018: Massachusetts Division of Securities launches investigation
- November 2018:: GPB’s auditor resigned, citing perceived risks; and
- December 2018: FINRA and SEC launch investigations into broker-dealers that sold GPB.
- February 2019: The FBI and New York City Business Integrity Commission made an unannounced visit to GPB’s office in New York
- June 2019: GPB reports losses in two of its largest investment funds:
- July 2019: Class action lawsuit filed on behalf of investors against GPB Capital Holdings;
- August 2019: David Rosenberg accuses GPB of running a ”Ponzi-like” scheme.
- September 2019: Audited financials release delayed and Prime Automotive problems continue.
- October 2019: Peiffer Wolf and Meyer Wilson filed complaints on behalf of 91-year-old Florida widow and retired Russian emigre couple in Oregon.
- November 2019: A new class action lawsuit is filed by Peiffer Wolf and Meyer Wilson on behalf of GPB investors.
- December 2019: News broke that David Rosenberg, the former CEO of Prime Automotive Group, had amended his lawsuit against GPB in an attempt to get reinstated as CEO of Prime Automotive.
According to InvestmentNews, “As many as 60 broker-dealers have sold GPB funds. While many were smaller [independent broker-dealers] IBDs, among the most prominent listed in Securities and Exchange Commission filings were four Advisor Group broker-dealers: Royal Alliance Associates Inc., Sagepoint Financial Inc., FSC Securities Corp., and Woodbury Financial Services Inc.”
Brokers licensed with FINRA are required to follow rules, laws, and regulations when recommending the purchase or sale of a security. Additionally, the broker-dealers are required by law to supervise broker activities.