Delayed Filing with the SEC Shows 45.2% Drop in AUM Over 18 Months
Last month, GPB Capital Holdings finally filed its Form ADV with the US Securities Exchange Commission (SEC) after requesting an extension from the regulator in 2019.
In the form, the alternative asset firm, which is already under siege in the wake of numerous federal and state regulator investigations, an FBI probe, and lawsuits accusing it of operating a massive Ponzi scam, reported a $196.3M decline in assets under management (AUM) over 18 months from the end of 2017 to the end of June 2019. That’s a 45.2% drop from $434.3M in AUM to $238.6M.
Assets under management are the total market worth of investments overseen by a person or entity. The AUM that GPB Capital Holdings reported on its form falls under the purview of its registered investment adviser and does not include the assets of the holding companies that GPB oversees.
This is just the latest red flag involving GPB, which suspended investor redemptions after raising $1.8B from thousands and are reporting significant losses across all its numerous private placement funds. Not only that, but the alternative assets firm hasn’t provided audited financial statements to investors in years.
Also on the Form ADV to the SEC, GPB said that the auditor that made the valuations for its private funds had stepped down, as did the auditor for its Armada Waste Management. These are not the first auditors to resign from working with GPB.
Despite Denying Massachusetts’ Fraud Allegations GPB’s Response Raise More Questions
In addition to class action securities lawsuits against GPB Capital Holdings and litigation by its former business partners, the Massachusetts Securities Division recently sued the firm for fraud. Allegations include self-dealing and making false statements to about 180 of the state’s residents, who placed about $14M in the GPB private equity funds and were promised 8% returns.
The alternative assets firm filed a response to the complaint earlier this month denying the fraud allegations, including claims that it used investors’ money to pay fund distributions.
However, GPB said it couldn’t deny or admit to the contention that it raised over $645.8M from investors of just its GPB Holdings II fund, paying more than $47.9M in commissions from this fund, or that it said in a placement memo that the firm could draw money from investor contributions to cover fund distributions.
The firm also denied failing to disclose in offering documents that the founder, David Gentile, was a part-owner of Ascendant Alternative Strategies LLC, which is an affiliated broker-dealer. The other part-owner, Jeffry Schneider, also owns Massachusetts-based brokerage firm Ascendant Alternative Assets, which marketed the GPB funds.
Brokerage Firm Negligence in Selling GPB Private Placements & Investments
Dozens of broker-dealers and their registered representatives that sold GPB private placements made $160M in commissions. Shepherd Smith Edwards and Kantas (SSEK Law Firm) has been pursuing investment fraud claims against many of these brokerage firms on behalf of investors. Contact us today so that we can help you explore your legal options if you purchased GPB private placements or investments.