GPB Capital Sales Cost Broker-Dealers With FINRA Fines

More bad news for GPB Capital Holdings investors hit this week as 2 broker-dealers were penalized by the Financial Industry Regulatory Authority (FINRA). Dempsey Lord Smith and BD4RIA Inc. for selling negligence to GPB Capital Holdings private customers. This was due to GPB’s inability to audit financial statements for high-risk, high-commission investments.

Both broker-dealers accepted FINRA’s findings as settlements without admitting to or denying them. These settlements apply to actions that took place in spring 2018. Clients and financial advisors who bought GPB private placements waited while Finra filed financial statements to the Securities and Exchange Commission. Two of the largest funds were covered by financial statements. Both funds had passed the industry thresholds to make such information public a year before.

GPB failed to file audited financial statements by the deadline and was forced to reduce dividends for private placements. GPB was charged last year with fraud by the Justice Department and SEC.

According to Haselkorn & Thibaut (, investors are filing lawsuits and claims against financial advisors to recover losses. To assist GPB investors, they have set up a 1-888-902-6872 toll-free number and “GPB Capital Investor Guide”.

GPB private placement brokers charged between 7% to 10% commissions and GPB product fees to clients at many of the firms they represented. This is the highest permitted percentage in the industry.

Dempsey LordSmith employs 100 brokers and financial advisors. It broke industry rules in May 2018 as well as June 2018. According to FINRA, it “negligently forgotten” to notify four investors in GPB Private Placements of its failure to file required filings to the SEC in a timely manner. Four investors were given unsuitable GPB Securities recommendations by brokers between September 2015 and June 2018.

Finra reports Dempsey LORD Smith was fined $70,000 and ordered to pay restitution of nearly $30,000 plus interest. Joel Beck, the attorney representing the firm declined to comment.

FINRA reports that BD4RIA employs 13 brokers and advisers. The firm notified seven investors in June 2018 that they had failed to file required filings with the SEC. The firm was fined $40,000. On Tuesday, the firm was ordered to pay $40,000. Matthew Henneman, an attorney representing BD4RIA, did not respond to a request for comment.

FINRA seems to be gaining momentum in fining companies in 2018, over GPB securities sales. Geneos Wealth Management Inc. settled for $400,000 last week with Finra over GPB private placements and alternative investments, the LJM Preservation & Growth Fund.

GPB Capital, a New York-based alternative asset management firm, was the general partner in limited partnerships. These partnerships were created to acquire income-producing businesses like auto dealers or trash companies. GPB raised $1.8 million from investors.

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