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15 broker-dealers fined by FINRA in 2022 over GPB Capital sales

On Behalf of | Jan 11, 2023 | FINRA Compliance

15 broker-dealers were the subject of enforcement actions in 2022 over their sales of GPB Capital Holdings private placements, according to a report by InvestmentNews.

The firms were penalized by the Financial Industry Regulatory Authority a total amount of $3.7 million for their infractions for an average of $247,000.

New York-based GPB Capital was the general partner for limited partnerships formed to acquire income-producing companies. From 2013 to 2018, the firm began several limited partnerships in order to acquire controlling interests in private sector companies. But FINRA said GPB did not make required financial filings with the Securities and Exchange Commission, including filing audited financial statements.

The 15 broker-dealers penalized by FINRA did not tell their investors in GPB Capital Holdings that the issuer had failed to make the required filings with the SEC. The firms were found to be in violation of FINRA Rule 2010, requiring members to observe high standards of commercial honor and just and equitable principles of trade.

Among the firms sanctioned were FSC Securities, Royal Alliance, SagePoint Financial and Woodbury Financial. In a settlement reached in November, they did not admit or deny FINRA’s findings but did agree to pay fines totaling $200,000 and restitution in the amount of nearly $1.1 million, along with being censured.

Most recently, FINRA announced settlements with two smaller firms, Center Street Securities Inc. and Moloney Securities Co. Inc. The firms agreed to pay fines and restitution to clients totaling nearly $430,000.

The attorneys at Lewitas Hyman were formerly senior attorneys in the SEC’s Division of Enforcement. We have represented clients in regulatory matters while working at Morgan Stanley and in private practice at some of the world’s largest law firms. Therefore, we understand the complexities that come with being the subject of a regulatory inquiry, and we have the experience to guide and advise you through any type of regulatory investigation. If you are the subject of a regulatory proceeding, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a free consultation.