FINRA Censures and Fines Capital Investment Group Inc. for Unsuitable GPB Funds Sales
According to The Financial Industry Regulatory Authority (FINRA) on August 22, 2022, the regulator censured and fined Capital Investment Group Inc. $50,000 and ordered the firm to pay partial restitution of $64,800, plus interest.
Capital Investment Group Inc. (CRD #14752), a broker dealer based in Raleigh, North Carolina, engages in a general securities business, including the sales of equity securities, mutual funds, variable annuities, and private placements.
According to FINRA, Between May 4, 2018, and June 29, 2018, Capital Investment Group allegedly negligently failed to tell nine investors in two offerings related to GPB Capital Holdings, LLC that the issuers failed to timely make required filings with the Securities and Exchange Commission, including filing audited financial statements.
Last February we reported that the CEO of GPB Capital Holdings, a New York-based registered investment adviser, and two others were arrested in connection with a massive “Ponzi-like scheme” that allegedly defrauded 17,000 investors across the U.S. out of more than $1.7 billion, according to the U.S. Attorney’s Office for the Eastern District of New York.
According to FINRA, on April 27, 2018, GPB Capital sent a letter to many broker-dealers that sold GPB Capital-related investments, including Capital Investment Group, stating that GPB Capital was in the process of registering certain classes of securities issued by certain of limited partnerships, including GPB Automotive Portfolio, and GPB Holdings II, with the SEC. As part of that process, GPB Automotive Portfolio and GPB Holdings II were required to file audited financial statements. The letters further stated that the delivery of these audited financial statements would be delayed pending the completion of a forensic audit.
FINRA indicates that while Capital Investment received the email from GPB Capital notifying it of the delays and GPB Capital’s stated intention to complete a forensic audit, the firm allegedly sold eight limited partnership interests in Automotive Portfolio and one limited partnership interests in Holdings II after that announcement. The principal value of those nine sales, which occurred between May 4, 2018, and June 29, 2018, totaled $860,000.
The firm reportedly received a total of $68,800 in commissions from the sales. In connection with these nine sales, however, Capital Investment Group’s representatives did not inform the customers that Automotive Portfolio and Holdings II had not timely filed their audited financial statements with the SEC or the reasons for the delay.
Potential Lawsuits to Recover Financial Losses
The White Law Group has represented numerous investors who suffered financial losses involving GPB Capital. To learn more about the firm’s investigation please see:
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