GPB Capital, a New York-based alternative asset management firm, sent a letter to investors disclosing that authorities made an unannounced visit to their New York offices and collected materials on Thursday.
While the company did not disclose which agency or agencies visited, or what they collected, an anonymous industry source claims that both the FBI and the New York City Business Integrity Commission arrived on Thursday. GPB did not respond to inquiries at press time.
“For many months we have been taking steps to strengthen our business including enhancing our oversight and auditing practices,” wrote David Gentile, CEO of GPB Capital Holdings in the letter. “Recently, we have been cooperating with inquiries from various authorities and have been producing requested documents on a rolling basis. On February 28, 2019, authorities came to GPB Capital’s New York offices and collected material. We believe the visit, while unscheduled, was a continuation of this process and we will remain cooperative with any inquiries.”
GPB focuses on acquiring income-producing private companies in various industries, including the automotive retail and waste management sectors, and has raised $1.5 billion in investor equity through various private placement offerings.
The company has experienced regulatory headwinds since announcing its decision in August 2018 to temporarily halt raising new money and suspending redemptions to focus on accounting and financial reporting on two of its funds, the GPB Automotive Portfolio and the GPB Holdings II.
In September 2018, the Massachusetts Securities Division launched an investigation into 63 independent broker dealers that sold GPB private placements. The regulators said the investigation stemmed from a tip concerning GPB’s sales practices.
On month later, GPB notified broker-dealers that auditor Crowe LLP had resigned “due to perceived risks…that fell outside of their internal risk tolerance parameters.” The company has since hired EisnerAmper LLP to replace Crowe. In December 2018, FINRA and SEC reportedly launched independent investigations into the company and the broker-dealers that sold its funds.