FINRA Fines Investment Firms $3.7 Million For GPB Capital Sales

Fifteen brokerage firms were fined a total of $3.7 million by FINRA in 2018 for private placements sold by GPB Capital Holdings as early as the spring of that year. At the time, GPB had failed to file the required audited financial statements for its two largest limited partnerships with the Securities and Exchange Commission. The firms had already sold the private placement to customers.

GPB Capital Holdings is a New York-based alternative asset management firm founded by David Gentile in 2013. The company has faced legal challenges recently, as the US Securities and Exchange Commission (SEC) charged GPB Capital Holdings and three of its executives with defrauding over 17,000 retail investors in a Ponzi-like scheme.

The SEC has plans to present a federal court with a proposal to place GPB Capital Holdings into receivership to return money to the defrauded investors. The company has also filed a Registration Statement on Form 10 for GPB Holdings II, LP, with the U.S. Securities and Exchange Commission.

GPB Capital Holdings recently sold Prime Automotive for $880 million in September 2021[3]. As of December 31, 2021, the Partnership recognized total revenue of $153.4 million and produced a net income of $168.7 million.

Investors who have suffered losses with GPB Capital Holdings and are seeking recovery options should talk with an investment fraud lawyer. They can call 1-888-779-0119 to receive their free “GPB Capital Investors Guide” from Haselkorn & Thibaut (, leading investor loss recovery efforts.

Firms’ repeated failure to notify customers of GPB’s defect was a major violation of industry regulations for which the firms were penalized by Finra and the basis for the settlements.

Last Thursday, FINRA fined Nashville’s Center Street Securities Inc., which employed 75 registered representatives, and Missouri’s Moloney Securities Co., which employed only four. Both firms had sold high-commission, high-risk private placements. Last Wednesday, Inc. hired 130 new employees. In its actions, Finra alleged that the firm’s failure to notify customers that GPB had not submitted audited financial statements constituted negligent conduct. The Finra actions against the other 13 firms all use very similar language.

Neither firm admitted or denied FINRA‘s findings in the settlements, but Center Street paid a $70,000 fine and reimbursed clients nearly $90,000. Moloney Securities settled on a $268,000 refund to customers.

On Tuesday morning, we called both companies and left messages for senior executives.

According to a tally by InvestmentNews, the average penalty last year was $247,000 per company. This includes fines and restitution to clients or just the latter. The costs to the firm, however, are often much higher than that, as these cases often involve hiring attorneys to resolve disputes and serving as guides for plaintiff’s lawyers who wish to sue brokerage firms on behalf of product purchasers.

Kalos Capital Inc., a broker-dealer headquartered in suburban Atlanta, is a good example of a medium-sized independent firm.

Having lost over $9 million in legal fees and costs related to sales of GPB private placements, alternative investment advocate Kalos Capital announced in October that it was shutting down.

Established in 2013 as an alternative asset management firm in New York, GPB Capital was the general partner for limited partnerships that acquired profitable businesses like car dealerships and waste management firms. A total of $1.8 billion was collected from investors by GPB. Despite GPB’s asset sales, no detailed plans for how the company will reimburse its investors have been made public.

Last year, four Advisor Group broker-dealers were the most prominent and largest firms penalized by Finra in the GPB sales matter. In a settlement reached at the end of November, Finra imposed penalties totaling nearly $1.3 million on four Advisor Group firms for failing to meet GPB sales quotas. These firms were FSC Securities Corp., Royal Alliance Associates Inc., SagePoint Financial Inc., and Woodbury Financial Services Inc.

Leave a Comment

Your email address will not be published. Required fields are marked *

Scroll to Top