There is yet another legal dispute looming over GPB Capital Holdings, which raised $1.5 billion from investors through the sale of high-commissioned, high-risk private placements, writes Bruce Kelly in a recent InvestmentNews article. This dispute is over the control of the Volkswagen's auto dealerships that GPB purchased.
Volkswagen of America Inc. filed an amended complaint against GPB Capital on February 18, 2020, alleging that GPB broke an agreement with Volkswagen in September when David Rosenberg was removed as the head of three auto dealerships. He had been with them since 2017. Rosenberg sued GPB in July alleging GBP engaged in serious financial misconduct. He also alleged GPB tried to push him out after he complained to the Securities and Exchange Commission (SEC), according to the InvestmentNews article. According to the complaint, Rosenberg was eventually pushed out and then Volkswagen told GPB to divest from the dealerships. In the suit filed in the US District Court for the Southern District of New York, Volkswagen is seeking declaratory judgment in the dispute with GPB over the control of the three dealerships.
GPB’s business strategy was to partner with independent broker/dealers to sell private partnerships to their more wealthy investors. They were then supposed to use the money to buy auto dealerships and waste management businesses with high returns for the clients. However, private placements often generate high commissions for brokers and have other additional fees and costs to the investors.
In the InvestmentNews article, they wrote that a spokeswoman for GPB, Nancy Sterling stated in an email that, “Volkswagen of America has filed this suit to try to avoid arbitration sought by the dealerships. This lawsuit has a number of flaws, and GPB will defend this vigorously.”
If you’ve suffered financial losses due to your broker/dealer recommending investing in any of the GPB Capital Holdings private placement funds, contact Soreide Law Group and speak to an experienced securities lawyer regarding the possible recovery of your investment losses through a FINRA arbitration at: 888-760-6552.
Soreide Law Group works on a contingency fee and represents our clients nationwide before FINRA.
