What Did Your Brokerage Firm or Investment Adviser Do Wrong With GWG
Published On: May 3, 2019

It is time for GPB Fund investors to seriously consider their legal options. Over the last year, the GPB Capital Funds have been beset by serious issues raising red flags for investors:

  • On April 30, 2018, GPB missed a mandatory filing date with the SEC
  • In August 2018, GPB announced that is was “overhauling” and restating its 2015 and 2016 financials
  • In September 2018, GPB Capital received subpoenas from the SEC
  • In November 2018, GPB’s accounting and auditing firm, Crowe, LLP, resigned
  • In February 2019, the FBI and New York state regulators paid a visit to GPB Capital headquarters
  • April 30, 2019, marked the one year anniversary of GPB Capital blowing its SEC filing deadline

Stoltmann Law Offices is now fighting to recover their clients’ GPB Fund investments by taking the fight to the brokerage firms that sold these Funds to their clients. This can only be done by filing arbitration claims through FINRA Dispute Resolution.  It has now been one year since GPB Capital was required to file registration papers and financial reports publicly with the Securities and Exchange Commission about its private placement funds. The April 30, 2018 deadline for these public filings, which are intended to remove the veil of secrecy from private placements after they reach a certain level of investor capital, was ignored by GPB Capital and is the subject of ongoing regulatory investigations. It is becoming obvious that something is rotten at GPB Capital and investors need to take action. The brokerage firms that sold GPB Capital Funds, like Cetera Advisors, FSC, NewBridge, and Royal Alliance, had ironclad duties to their clients rooted in the FINRA Suitability Rule, including the obligation to perform due diligence on the GPB Capital funds before recommending the Funds to their clients.

Sophisticated institutional investors have their own teams of CFAs, CPAs, and lawyers who are trained and experienced in evaluating an offering like the GPB Funds before investing their money. Retail investors – mom and pop investors – even allegedly “accredited investors” employ no such teams and do not have access to the information necessary to fully evaluate an investment like GPB Capital before investing. So investors rely on their financial advisors and the firms that employ them to objectively evaluate these offerings to make sure they aren’t investing their money in something that is either speculative beyond measure, that lacks fundamental safeguards and controls to protect investor interests, or that could be an outright Ponzi scheme.

But brokerage firms have a conflict of interest that prevents any level of objectivity when selling private placements. They get paid commissions that are unmatched by more standard investments like mutual funds, stocks, or bonds. Consider this: it has been reported that GPB Capital raised $1.5 billion from retail investors. The brokerage firms that sold these offerings have pocketed between 8% and 10% of the total, or between $120million and $150million in fees and commissions. The adage “no man can serve two masters” remains true. What brokerage firms do best is sell. They check the boxes on a due diligence form and stuff it in their files, and sell.

These speculative investments, which were sold almost exclusively to retail investors through brokerage firms like Cetera Advisors, Royal Alliance, and Newbridge Securities, amongst others, are extremely opaque and illiquid. Despite requirements in the offering memoranda for these funds that require it to provide at least unaudited financial reports to investors, none have ever been provided. The fact is, investors simply do not know what their money was actually invested in when they entrusted their money with GPB Capital.  These systemic and organizational failures at the fund level are the exact sort of problems that are endemic to speculative private offerings like the GPB Capital Funds.

It is the public disclosure requirements that prevent companies like GPB Capital from registering publicly. They do not want their financials or books and records being subject to public scrutiny. They certainly do not want the SEC or other regulators kicking the tires on their business practices or investment portfolio.

If you were sold investments in any of the GPB Funds by your financial advisor, you may have a claim to recover the money you invested through FINRA Arbitration.  Please contact Stoltmann Law Offices at 312-332-4200 for a free, no obligation consultation with an attorney. We are a contingency fee law firm which means we do not get paid until you do!


The posting on this site are mere OPINIONS and NOT statements of fact in any way whatsoever. The information should not be relied upon and there have been no findings made against the firms or individuals referenced on this site. In addition, this Blog is made available for educational purposes only and incorporates information from the web as well as to give you general information and a general understanding of the law, not to provide specific legal advice. By using this blog site you understand that there is no attorney client relationship between you and Stoltmann Law Offices (161 N Clark Street 16th Floor Chicago, IL 60601). The Blog opinions should not be used as a substitute for competent legal advice from a licensed professional attorney in your state.


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