GPB adds class action lawsuit to list of woes

GPB adds class action lawsuit to list of woes
Private placement firm's latest hurdle stems from the lack of financial reporting.
AUG 06, 2019

GPB Capital Holdings, the private placement manager already mired in investigations and lawsuits, is now facing a potential class action lawsuit from disgruntled investors seeking financial information about its funds. Filed by two investors in federal court in Manhattan on Friday, the complaint alleges that GPB has breached its fiduciary duty because it has not given its investors annual audited financial statements. Launched in 2013, GPB has raised $1.8 billion from investors through independent broker-dealers. It invests primarily in auto dealerships and waste management businesses. Advisers sold the high risk and high commission private placements to clients with the intent on generating strong returns that were not tied to the broad stock market. However, GPB blew past its April 30, 2018 deadline to register the funds and make public financial information, including annual reports. GPB has said it intends to release the financial information by the end of next month, but that lack of reporting is at the heart of the complaint. The company's failure to provide timely and accurate financial statements "has prevented and continues to prevent" the investors, Victor Wade and Karen Loch, from getting information about their investments and taking actions that could mitigate losses, according to the complaint. Mr. Wade invested $50,000 in the GPB Holdings II while Ms. Loch invested $75,000 in another fund, GPB Automotive. A spokesperson for GPB, Kelly Whitten, did not return calls on Tuesday for comment about the lawsuit. GPB has faced a slew of hurdles over the past year, as the investor complaint notes. Those include its accountant resigning last fall and the FBI in February raiding GPB's Manhattan offices. About 60 broker-dealers sold the GPB private placements.

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