Kalos Financial Defends Its Sale Of GPB Private Placements
In a letter issued to investors on November 4th, Kalos Financial President, Larry Lyons, reported that its due diligence team recently met with senior GPB Capital Holdings executives including CEO, David Gentile.
The brokerage firm is one of dozens of broker-dealers under fire for selling GPB private placements that were issued by the asset management company, which has since been accused of operating a $1.8B Ponzi fraud.
Shepherd Smith Edwards and Kantas, LLP (SSEK Law Firm) has been meeting with many GPB investors. Already, we have filed a number of investor fraud claims against several brokerage firms, including Kalos Financial, as we seek to help our clients recover the losses they sustained from investing in one of the GPB funds.
Kalos President Claims Customers Were Apprised Of The Risks
In the letter, Lyons appears to immediately defend the actions of the firm, noting that even before its customers invested in GPB private placements, they were sent documents that “explicitly disclosed” that GPB investments were risky and “illiquid.”
He said that these same customers acknowledged not only receiving the documents but also, had said that they understood what was in them. Yet despite this, Lyons notes, “we have heard that some of you were surprised.”
By making such statements, the brokerage firm is implying that GPB investors who are now claiming they were not fully apprised of the risks involved – typically grounds for a broker firm fraud claim when financial losses result – have no reasonable grounds to allege misrepresentations or omissions because they knew exactly what they were getting involved in.
Lyons said that during the meeting, GPB senior management explained how inevitably, in such a venture – GPB Capital Holdings invests in auto dealerships and waste management and has raised over $1.5B from investors – there are “bumps along the way.”
GPB said that while changes have been made to address concerns, any resulting effectiveness would “most likely” take 2-3 years.
Class Action Lawsuit Against GPB Alleges Complex Scheme
Last week, in a recent class action securities fraud, GPB Capital and its executives along with other parties were accused of working together to run a complex type of Ponzi fraud.
This Ponzi scam enriched not just the company and its senior management, but also others, including broker-dealers and their brokers that sold the GPB investments and earned over $160M in commissions. Meanwhile, investors have been left grappling with unexpected, and in many cases, major losses as the GPB funds have plunged in value – some by more than 70% – and redemptions remain suspended.
Not only that, the US Securities and Exchange Commission (SEC), the Financial Industry Regulatory Authority (FINRA), other regulators and the Federal Bureau of Investigation (FBI) are all investigating GPB Capital Holdings, its CCO Michael Cohn – who was just indicted for obstruction – and two of its former business partners who are not just suing the company but also crying Ponzi scam.
Lyons, however, after recapping these facts in the letter, appeared to side with the asset management firm by saying “some would say that GPB can’t catch a break.” Lyons stated that Kalos continues to have a “good working relationship” with GPB.
GPB Investor Lawyers
SSEK Law Firm harbors no illusions about what is going on at GPB Capital and the Ponzi fraud it has been operating. Our securities attorneys are hard at work helping investors fight to get back the money they lost with these investments.
Many investors, including Kalos customers, were not apprised of the risks. For quite a number of them, GPB private placements were never suitable enough for their portfolio or their investment goals, to begin with. Contact our investor law firm today so that we can help you explore your legal options.