Massachusetts Sweeps 63 BDs Selling GPB Private Placements

These matters have led to a sweep of 63 broker-dealers that sell GPB private placements, with the division requesting data on the extent of sales activity in Massachusetts, disclosure and marketing documents that the firms provide to investors on the solicitations and data on investor suitability.

"While my Securities Division's investigation is in the very nascent stages, recent activity within GPB raises red flags of potential problems. These red flags, coupled with the fact that sales of private placements by independent broker-dealers have been an ongoing source of investor harm, have led to this investigation," Galvin says in a statement.

He adds, "I must also express my serious concerns regarding the expected proposal by the SEC to expand who can participate in private securities offerings. Without a strong fiduciary rule to prevent sales practice abuses, it is utter folly not to know that main street investors will be hurt."

A GPB Capital spokesperson said the company couldn't comment on the BD sweep, but "as we have previously disclosed to investors, GPB Capital is in the process of completing the audits of the financial statements for certain of its funds and is currently not accepting new capital from investors until that process is complete."

— Check out Galvin Busts NPH Affiliate for Improper REIT Sales on ThinkAdvisor.