Bates Research - 02-11-20

Private Placement Alert: GPB Private Funds Under Scrutiny

Bates Group is alerting counsel that we are seeing cases filed where firms sold private funds issued by GPB Capital Holdings LLC. It is alleged that firms selling these funds were negligent and failed to perform adequate due diligence when approving these funds for sale, misrepresented and omitted material information when recommending and/or selling these funds to their clients, had conflicting interests in selling the GPB Capital Funds, negligently supervised the sale of these funds and breached the fiduciary duty owed to their clients.

GPB Capital Funds include:
  • GPB HOLDINGS, LP;
  • GPB HOLDINGS II, LP;
  • GPB AUTOMOTIVE PORTFOLIO, LP;
  • GPB COLD STORAGE, LP;
  • GPB WASTE MANAGEMENT FUND, LP;
  • GPB HOLDINGS III, LP;
  • GPB HOLDINGS QUALIFIED, LP;
  • GPB NYC DEVELOPMENT, LP;

Bates Group Support:

Bates staff and experts have provided both consulting and testimony services in matters involving private placement funds. Bates experts have opined on the rules and regulations associated with public and private securities offerings,  the adequacy of disclosures in offering documents, the adequacy of due diligence undertaken by firms selling private funds, a determination of the product’s suitability for sale by the firm, a determination of the suitability of individual recommendations made, the adequacy of sales supervision, and an assessment of whether the firm and its representatives met their fiduciary obligations to accredited and retail investors.

Bates has also performed quantitative analyses examining the feasibility of investments at issue producing the expected or advertised returns, including calculating a probability-weighted expected value of return amongst other hypothetical scenarios.

Our experts have provided in-depth knowledge and analysis concerning trading strategies involving alternative investments and the role of these strategies within an overall investment objective, as well as the relative risks for the client in engaging in these types of strategies. We have also provided analysis and testimony in support of matters involving strategies employed to generate additional yield in a client’s portfolio, across a variety of investment products, as well as damages calculation and alternative damages calculation.

Specifically, Bates can assist in the following ways:
  • Examining the relationship between the general partner and the lead broker-dealers to assess if there was a conflict of interest in brokering, selling, and underwriting the funds.
  • Assessing whether the offerings were appropriately registered under the Securities Act of 1933 and Section 12(g) of the Securities Exchange Act of 1934.
  • Assessing the adequacy of disclosures in the private placement memorandum and other offering documents, including the adequacy of risk disclosure and whether there were any material misstatements and omissions.
  • Assessing the suitability of the products and the suitability of the recommendation.
  • Analyzing the trading in brokerage accounts to determine the P/(L) associated with investments in the funds at issue.
  • Contextualizing the fees and commissions that were charged in light of alternative products of a comparable nature and examining the likelihood of the investments at issue generating the expected or advertised returns.
  • Examining the changes in the investor’s portfolio risk and expected return when investments in the funds at issue are considered as part of an overall investment strategy; forecasting the probability of a loss and the probable size of a loss at the time of purchase.
 
Please contact us today if you have any questions or need assistance:
 

Andrew Daniel, Securities Litigation Expert and Director – adaniel@batesgroup.com

Alex Russell, Managing Director, Practice Leader, Regulatory Enforcement & Complex Litigation – arussell@batesgroup.com

Julie Johnstone, Managing Director, Practice Leader, Retail Litigation – jjohnstone@batesgroup.com

Peter Klouda, Securities Litigation Expert and Director, Retail Litigation – pklouda@batesgroup.com

 
Learn More About Bates Group’s Securities Litigation Practice

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