The Daily Brief
William Galvin
William Galvin

Massachusetts Securities Regulator Cracks Down on Private Placements

Secretary of State William F. Galvin announced an investigatory sweep of 63 broker/dealer firms.

Secretary of the Commonwealth of Massachusetts William F. Galvin announced Wednesday an investigatory sweep of 63 broker/dealer firms in connection with private placements sponsored by GPB Capital Holdings.

According to a statement, the Securities Division requested information from the firms in question concerning the extent of sales activity in the state, disclosure and marketing documents provided to investors in connection with the solicitations and any information on investor suitability.

GPB sells illiquid, high-risk, high-commission alternative investments through various independent broker/dealers. The investigation was prompted by a variety of factors, including an anonymous tip from an independent firm, GPB missing important Securities and Exchange Commission filing deadlines for a pair of private placements and the fact that GPB is currently embroiled in a lawsuit with a former business partner over a deal involving the sale of an auto dealership, to the tune of $40 million.

“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 [that] have led to this investigation,” Galvin said.

 

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