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GPB Capital Compliance Chief Charged with Obstruction of Justice by U.S.

 

As we previously reported, the SEC, FINRA, the FBI, and the State of Massachusetts are investigating GPB Capital Holdings LLC (“GPB”) related to the accuracy of GPB’s disclosures of financial information to its investors.  GPB, a New York asset management firm, focused on private placement investments, has been under investigation since September 2018. On October 23, 2019, GPB’s legal problems continued as the U.S. Department of Justice charged Michael Cohn, Chief Compliance Officer of GPB, with Obstruction of Justice related to the SEC investigation.  Mr. Cohn, who up until October 2018 worked at the SEC as an examiner, allegedly reviewed and took with him unauthorized significant and comprising information related to the SEC’s GPB investigation when he left the SEC to work for GPB. Additionally, throughout his tenure at GPB, Mr. Cohn allegedly would brag about his inside knowledge of the SEC GPB investigation to senior members of GPB.

Wastebasket Filled with Crumpled Dollar Bills

 

 

GPB and the broker-dealers that sold it to their clients have weathered a storm of bad news over the past year.  Public records show there are at least 80 broker-dealers that sold, or were authorized to sell investments for GPB.  As registered broker-dealers selling private placements, these companies were required to conduct their due diligence in investigating potential investments and making sure their clients understand the risks associated with each potential investment before investing their clients’ money in the investment.

The list of broker-dealers who sold or were authorized to sell GPB securities includes:

* Accelerated Capital Group

* Advisory Group Equity Services, Ltd

* Aegis Capital Corp

* Aeon Capital, Inc.

* American Capital Partners, LLC

* Arete Wealth Management, LLC

* Arkadios Capital

* Ascendant Alternative Strategies, LLC

* Ausdal Financial Partners, Inc.

* Avere Financial Group, LLC

* Axiom Capital Management, Inc.

* BCG Securities, Inc.

* Benjamin & Jerold Brokerage I, LLC

* Cabot Lodge Securities, LLC

* Calton & Associates, Inc.

* Cape Securities, Inc.

* Capital Financial Services, Inc.

* Capital Investment Group, Inc.

* Cascade Financial Management, Inc.

* Center Street Securities, Inc.

* Coastal Equities, Inc.

* Colorado Financial Service Corp.

* Concorde Investment Services, LLC

* Crown Capital Securities, L.P.

* Crystal Bay Securities, Inc.

* D.H. Hill Securities, LLLP

* David A. Noyes & Company

* Dawson James Securities, Inc.

* Dempsey Lord Smith, LLC

* Detalus Securities, LLC

* DFPG Investments, Inc.

*Dinosaur Financial Group, LLC

* Emerson Equity LLC

* Financial West Group

* FSC Securities Corp.

* Geneos Wealth Management, Inc.

* Great Point Capital, LLC

* Hightower Securities, LLC

* IBN Financial Services, Inc.

* Innovation Partners LLC

* International Assets Advisory, LLC

* Investment Architects, Inc.

* Kalos Capital, Inc.

* Kingsbury Capital, Inc.

* Landolt Securities, Inc.

* Lewis Financial Group, L.C.

* Lion Street Financial, LLC

* Lowell & Company, Inc.

* Madison Avenue Securities, Inc.

* McDonald Partners LLC

* McNally Financial Services Corp.

* Moloney Securities Co., Inc.

* Money Concepts Capital Corp.

* MSC – BD LLC

* National Securities Corp.

* Newbridge Securities Corp.

* Orchard Securities, LLC

* Pariter Securities, LLC

* Partier Securities, LLC

* Private Client Services, LLC

* Purshe Kaplan Sterling Investments

* Royal Alliance Associates, Inc.

* Sagepoint Financial, Inc.

* Sandlapper Securities, LLC

* SCF Securities, Inc.

* Sentinus Securities, LLC

* Silber Bennett Financial, Inc.

* Stephen A. Kohn & Associates, Ltd

* Triad Advisors, LLC

* Uhlmann Price Securities, LLC

* United Planners’ Financial Services of America, LP

* Vanderbilt Securities, LLC

* Vestech Securities, Inc.

* Western International Securities, Inc.

* Westpark Capital, Inc.

* Whitehall-Parker Securities, Inc.

* Wilmington Capital Securities, LLC

* Windsor Steet Capital, LP

* Woodbury Financial Services, Inc

News of the charges against Mr. Cohn comes on the heels of disclosure by GPB Capital Holdings that certain of its private placement funds have suffered substantial losses. According to GPB Capital, as of the end of 2018, the losses in their funds range from 25% to 73%, with GPB Capital’s two largest funds, GPH Holdings II and GPB Automotive Portfolio, suffering 25.4% and 38% respective declines.  Further, GPB has failed to file audited financial statements for a prolonged period, suggesting that there may possibly be issues with its internal controls over financial reporting.  The GPB funds, which once were collectively valued at around $1.8 billion, are now purportedly worth about $1.1 billion.

The attorneys at Law Office of Christopher J. Gray, P.C. have significant experience representing investors in connection with complex investment products, including illiquid private placements and unregistered securities offerings.  Investors may contact us via the contact form on this website, by telephone at (866) 966-9598, or by e-mail at newcases@investorlawyers.net for a no-cost, confidential consultation.  Attorneys at the firm are admitted in New York, New Jersey, Wisconsin and various federal courts around the country, and handle cases nationwide (in cooperation with attorneys located in those states if required by applicable rules).