Madison Avenue Securities and Crystal Bay Securities Accused of Negligence in Connection with Sale of GPB Capital Stock

Two different claimants are seeking a combined $1.5 million in retirement savings and trust proceeds.

The Sonn Law Group is investigating allegations that Crystal Bay Securities and Madison Avenue Securities sold unsuitable investments in GBP Capital. Under FINRA Rules, brokerage firms are liable for their brokers’ misconduct or negligence and investors may be able to their investment through FINRA arbitration. Contact Sonn Law Group today or call us at 866–827–3202 for a free consultation.

GPB Capital is currently under investigation by the FBI, SEC, and FINRA. GPB Capital says they are participating with the investigation and will eventually release financial statements to investors. The manager of GPB Capital has raised more than $1.5 billion since 2013 with a portfolio of 160 companies, many of them auto dealerships and waste management companies. Its two largest funds reaped sales of $1.27 billion — with commissions of 8% — before GPB halted investment in them last year.

Currently, a 91-year-old widow from Florida and an immigrant couple from Oregon who purchased LPs issued by GPB funds have accused Madison Securities and Crystal Bay Securities of negligence and other claims in two FINRA arbitration cases. The retired couple, Alexandra and Grigory Kogan, purchased $50,000 worth of GPB automotive LPs, according to their separate claim. The Russian immigrants — one of whom is disabled — bought heavily into alternative investments, annuities and life insurance products.

“They told us those investments were ideal for us, though to this day I still have no idea what is meant by the term ‘alternative investments,’” Alexandra Kogan says. “Now we are at risk of losing everything we worked for.”

The other claimant, Millicent Barasch, suffered substantial losses from “illiquid, high commission, unsuitable products” such as three GPB funds, the claim alleges. “Both the firm and the broker should have been shut down years ago,” says Barasch’s son Jeffrey. “They took nearly a million dollars from her and then they tried to close up shop and scatter like roaches. This should never be done to another elderly person.”

The amount at stake in the two claims is $1.5 million in retirement savings and trust proceeds, according to the attorneys for the clients. They seek compensatory and punitive damages plus interest, along with attorney fees and other costs.

Representatives for GPB note that the alternative asset manager is not listed as the respondent in either case. “These are not actions against GPB Capital, but against independent broker-dealers who are unrelated to GBP Capital,” spokeswoman Nancy Sterling said in an emailed statement. “The only avalanche we have seen is the number of press releases from plaintiff law firms who are trying to solicit clients for claims against broker-dealers.”

Nevertheless, the two broker-dealers facing client arbitration represent only two of the more than 60 firms that sold LPs in GPB’s largest funds, according to SEC Form D filings. The group also includes HighTower Securities, Advisor Group’s four IBDs and Ladenburg Thalmann’s Triad Advisors.

Jeffrey R. Sonn is an experienced investor losses attorney. If you suffered losses because a financial professional committed acts in violation of FINRA Rules, Mr. Sonn will protect your rights and interests. Please do not hesitate to contact the Sonn Law Group today for a free review of your claim.