Alex Williams (CRD# 2646185), a broker and investment adviser based in New York, has received a pending customer complaint. According...Read More
GPB Holdings Complaints: Madison Avenue, Bankers Life Securities
Two broker-dealer firms have come under scrutiny for their role in selling investments in GPB Capital Holdings, according to a September 25, 2019 report by the Press Herald. Madison Avenue Securities, headquartered in San Diego, California, and Bankers Life Securities, headquartered in Chicago, Illinois have received complaints alleging they recommended unsuitable investments in the company, which the Press Herald notes has been described as a “Ponzi scheme.”
GPB Capital Holdings is the majority owner of Prime Automotive Group, whose former Chief Executive Officer David Rosenberg has accused the investment firm of “creating fake contracts and adopting deals that benefited the heads of the investment fund rather than investors,” according to another recent report by the Press Herald. The former CEO, who also alleged that GPB “was making moves to inflate dealership values and profits beyond what they really were,” was fired in September, after filing a lawsuit against the company in July.
GPB Capital Holdings is reportedly also the subject of probes by the Securities and Exchange Commission, the Federal Bureau of Investigation, and the Financial Industry Regulatory Authority. In September 2018, securities regulators in Massachusetts initiated an investigation into the sales practices of broker-dealer firms connected to GPB Capital Holdings private placements, according to ThinkAdvisor. That investigation reportedly focused on “the extent of sales activity in Massachusetts, disclosure and marketing documents that the firms provide to investors on the solicitations and data on investor suitability.”
The September 25 Press Herald report describes two recent complaints involving GPB Capital investments sold by Madison Avenue Securities and Bankers Life Securities. These complaints reportedly allege that GPB attracted the firms with “commissions far higher than the industry standard” and that to receive these commissions, the firms recommended “unsuitably risky investments” in contravention of industry rules concerning suitability standards and conflicts of interest. The complaints, filed on behalf of an elderly widow and a retired couple, reportedly “involve nearly $1.5 million in retirement savings and trust assets.”
GPB Holdings is also the subject of an investor class-action lawsuit filed in August 2019, alleging the firm failed to “provide timely and accurate financial statements,” according to the Press Herald. Meanwhile, the lawsuit filed by David Rosenberg alleges that in 2018, “an accounting firm hired to audit GPB Capital’s books resigned and said it was withdrawing its prior opinions that had given the investment firm a clean bill of financial health” for the years 2016 and 2015. That firm also allegedly discovered “‘numerous undisclosed and inappropriate’ transactions to benefit top GPB Capital executives,” and that GPB misled brokers about its split with the accounting firm.
The Press Herald reports that Madison Avenue Securities, Bankers Life Securities, and other firms that recommended investments in GPB Capital Holdings are expected to receive an “avalanche” of customer investor arbitration claims against them. The state and federal investigations concerning the company remain in progress as well.