FINRA Accuses Broker-Dealers of Negligence and Unsuitability
The Financial Industry Regulatory Authority (FINRA) recently fined three brokerage firms for negligently selling GPB Capital Holdings private placements to retail customers. The broker-dealers are Dempsey Lord Smith, BD4RIA, and Geneos Wealth Management.
They have agreed to pay a $70K fine plus more than $30K restitution (with interest), a $45K fine along with $40K restitution, and $400K, respectively. The self-regulatory organizations’ (SRO’s) case against Geneos is also over its sales of the LJM Preservation & Growth Fund to customers.
GPB Capital Holdings is accused of operating an over $1.8B Ponzi scam that defrauded more than 17,000 investors. Dozens of broker-dealers charged 7% to 10% in commissions and product fees, making millions of dollars. Customers who were sold GPB private placements have sustained significant losses. Many of them were retail investors whose financial advisors should have never recommended alternative investments to them.
Our GPB private placements attorneys represent those who have suffered losses because their broker unsuitably sold them investments in the GPB Funds. If you wish to explore your legal options, call Shepherd Smith Edwards today (SSEK Law Firm at investorlawyers.com) at (800) 259-9010.
Broker-Dealers Failed to Notify Customers About Delayed Financial Reports
FINRA’s charges against independent brokerage firms Dempsey Lord Smith and BD4RIA stem from actions that purportedly took place in the Spring of 2018. This was when GPB Capital missed its deadline for submitting audited financial reports due to the US Securities and Exchange Commission (SEC). This delay compelled the alternative asset firm to reduce private placement dividends.
The SRO alleges that Dempsey Lord Smith neglected to tell four GPB investors about the filing delay, and the firm made $25,840 in commissions from $323K in GPB investment sales. Also, from September 2015 to June 2018, Dempsey Lord Smith brokers are accused of unsuitably recommending GPB private placements to non-accredited investors.
These investors were not qualified to invest in these types of products. Not only that, but their investments went beyond the Georgia-based broker-dealer’s concentration threshold for alternative investment holdings.
Meanwhile, BD4RIA, based in Fort Worth, Texas, also purportedly neglected to notify several GPB investors about the company’s delay in submitting filings to the SEC. Both broker-dealers settled with FINRA without denying or admitting to the findings.
Geneos Accused of Failure To Supervise Recommendations of Alternative Investments, Including GPB
In the Geneos Wealth Management case, FINRA accused the Denver-based broker-dealer of failing to supervise its brokers’ recommendations of alternative investments. The SRO also alleges a “negligent” omission when the firm did not disclose that GPB Capital Holdings missed the deadline to turn in audited financial statements in 2018. The brokerage firm sold $165K in the GPB Automotive Portfolio Fund and made $11,550 in commissions.
Seasoned GPB Private Placement Lawyers
GPB Capital Holdings is under investigation by the SEC, and its now-former top executives are facing criminal charges. The company is the defendant in numerous lawsuits by states, regulators, and investors filing class action securities litigation.
If you are a GPB private placements investor, your best chance of financial recovery is to file your own FINRA arbitration claim against the brokerage firm that sold you these products. Contact us at SSEK Law Firm today.