Did Your Financial Advisor Recommend GPB Capital Funds?
By: Courtney Werning, Esq.
The investment fraud attorneys at Meyer Wilson are representing dozens of investors across the country in cases against the brokerage firms that approved GPB for sale to its customers.
A brokerage firm’s most basic obligation to its customers is to properly and thoroughly conduct a due diligence investigation on an investment before selling it to customers. Industry rules specifically place this requirement on brokerage firms because they are the gateway in which investments end up in the hands (and portfolios) of the public. By requiring a stringent investigation of the investments before sale to a single customer, the regulators have tasked brokerage firms to use their knowledge and expertise to weed out fraudulent investments before they hit the marketplace.
In the case of GPB Capital, more than 60 brokerage firms across the country approved the sale of a series of limited partnerships issued by GPB Capital Holdings: GPB Holdings, GPB Holdings Qualified, GPB Holdings II, GPB Automotive Portfolio, GPB Cold Storage, GPB NYC Development, GPB Waste Management, and GPB Holdings III.
What these brokerage firms should have easily uncovered during the due diligence process for the GPB funds would have, and should have, precluded them from selling GPB funds to their customers. Behind the public-facing façade of GPB Capital lurked a complex web of entities and individuals who propped up, facilitated, and financially benefited, from the GPB scheme. Like an onion, every time you peel a layer off the outer surface, you find another layer underneath of an entity profiting off the investors who put their money into the illegal machine of GPB Capital. Several conflicts of interest that these brokerage firms should have uncovered after undertaking any reasonable investigation were irreconcilable.
The answer to why and how the GPB funds landed in the marketplace despite all their problems lies in the extraordinary sales commissions offered to the brokerage firms who sold the funds to investors. Contrary to the standard practice in the industry, these commissions were paid by the investor, not by the issuer of the funds. More to the point, they ranged from 7% to as high as 11% of the capital invested—far beyond any similar offering.
If you invested in any of the GPB funds, the investment fraud attorneys at Meyer Wilson are ready to talk to you about your legal options. You can read more about our work on behalf of GPB victims at www.GPBlawyer.com. Give us a call for a free case evaluation.