FINRA Censures and Fines Geneos Wealth Management for Rules Violations involving LJM Funds & GPB Funds
According to The Financial Industry Regulatory Authority (FINRA) on March 18, the regulator has censured and fined Geneos Wealth Management $150,000 after the firm allegedly failed to supervise recommendations of the high-risk LJM Preservation and Growth Fund (LJM).
The firm also agreed to pay restitution of $250,710.41 and has established and implemented policies, procedures, and internal controls reasonably designed to address and remediate the issues, according to a Letter of Acceptance Waiver and Consent.
According to FINRA’s findings, from November 9, 2016, and February 6, 2018, Geneos failed to reasonably supervise representatives’ recommendations of the LJM Preservation & Growth Fund (LJM), an alternative mutual fund.
The AWC notes that Geneos permitted the sale of LJM on its platform without conducting reasonable due diligence of the company and without a sufficient understanding of its risks and features, including the fact that the fund pursued a risky strategy that relied, in part, on purchasing uncovered options.
Geneos also reportedly lacked a reasonable supervisory system to review representatives’ LJM recommendations. Geneos representatives sold $2.5 million in LJM funds to customers, according to FINRA’s findings. LJM’s value dropped 80% during an extreme volatility event in February 2018 and the fund ultimately liquidated and closed, resulting in hundreds of thousands in losses for Geneos’ customers.
Further, between April 27, 2018 and June 26, 2018, Geneos allegedly failed to notify three clients that GPB Capital Holdings, LLC, an issuer of private placement investments, was remiss in making required filings with the Securities and Exchange Commission, including filing audited financial statements.
According to FINRA, on April 27, 2018, GPB Capital sent a letter to many broker-dealers that sold GPB Capital-related investments, including Geneos, stating that GPB Capital was in the process of registering certain classes of securities issued by certain of limited partnerships, including GPB Automotive Portfolio, with the SEC. As part of that process, GPB Automotive Portfolio was required to file audited financial statements. The letters further stated that the delivery of GPB Automotive Portfolio’s audited financial statements would be delayed pending the completion of a forensic audit.
While Geneos learned of the delays, the firm purportedly sold a limited number of limited partnership interests in GPB Automotive Portfolio after that announcement, according to FINRA’s findings.
Potential Lawsuits to Recover Financial Losses
The White Law Group has received numerous calls from investors who suffered losses involving LJM funds. To learn more about the firm’s investigation please see:
The foregoing information is all publicly available and provided by the White Law Group. If you are concerned about investments with Geneos Wealth Management Inc., the securities attorneys at The White Law Group may be able to help you. For a free consultation with a securities attorney, please call (888) 637-5510.
The White Law Group, LLC is a national securities fraud, securities arbitration, investor protection, and securities regulation/compliance law firm with offices in Chicago, Illinois and Seattle, Washington. For more information, please visit our website, www.whitesecuritieslaw.com.
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