If you are have suffered losses in GPB Capital Holdings or one of its affiliates, you may be able to pursue recovery of your losses through securities arbitration or litigation. Please call Kons Law Offices at (312) 757-2272 for a FREE, NO OBLIGATION consultation to discuss your investment loss recovery options.
According to recent news reports, GPB Capital Holdings – an issuer of high-risk, commission rich private placement investments – temporarily ceased raising capital from new investor money to straighten out the accounting in two of its larger funds following missed financial reports due to the SEC by April 30, 2018. According to public information, GPB Capital raised between $600 million to $800 million from investors mostly through the independent brokerage firm channel and claims to have raised $1.5 billion in total. In September 2018, Massachusetts Secretary of the Commonwealth William Galvin announced a sweeping investigation into 63 broker-dealers selling private placements investments for GPB Capital Holdings. The Massachusetts investigation is in its early stages.
Brokerage Firms Have a Duty to Conduct Proper Due Diligence on GPB Capital Holdings
Securities broker-dealers and investment advisory firms have a regulatory duty to ensure that any investments they recommend to customers are suitable for them. This is especially important for brokerage and investment advisory firms selling private placement investments in companies like GPB Capital.
FINRA rules and common law fiduciary duties require that securities broker-dealers and investment advisers conduct a suitability analysis when recommending securities to investors that will take into account the investors’ knowledge and experience. The brokerage or investment advisory firm must make reasonable efforts to gather and analyze information about the customer’s other holdings, financial situation and needs, tax status, investment objectives and such other information that would enable the firm to make its suitability determination. For investment advisers, they are required to make sure that the investment is in the best interests of the client.
In addition to ensuring that securities are suitable for its customers on an individual level, FINRA Rule 2111 (NASD Rule 2310) also states that a securities broker must have reasonable grounds to believe that a recommendation to purchase, sell or exchange a security is suitable for the customer. This “reasonable-basis” suitability requirement means that in the context of private placement investments like GPB Holdings
Investment advisors, brokers, brokerage firms “may not rely blindly upon the fund manager for information concerning the fund,” nor may it rely on the information provided by the fund manager lieu of conducting its own reasonable investigation. Investment advisory and brokerage firms can be held liable for investment losses that stem from a failure to conduct adequate due diligence, or for breach of fiduciary duty.
GPB Capital Holdings Investors May Be Able to Pursue Recovery of their Losses through Securities Arbitration
Fortunately for investors, they may be able to recover their investment losses in GPB Capital Holdings through securities arbitration or litigation against the investment adviser, stockbroker, brokerage firm that recommended the GPB Capital to them.
If you are have suffered losses in GPB Capital Holdings, you may be able to recover your losses through securities arbitration or securities litigation. Please call Kons Law Offices at (312) 757-2272 for a FREE, NO OBLIGATION consultation to discuss your investment loss recovery options.
Kons Law Offices represents investors nationwide in securities arbitration and litigation matters. To learn more about the Firm’s securities litigation and FINRA arbitration practice, please visit www.investmentlossattorney.com.