On February 4, the U.S. Securities and Exchange Commission (SEC) announced charges against investment adviser GPB Capital and individuals affiliated with the firm, including its owner and CEO, David Gentile and Jeffry Schneider, the owner of GPB Capital’s placement agent Ascendant Capital. The SEC alleged that the firm and its affiliates had run a Ponzi-like scheme and violated whistleblower protection laws.
GPB Capital Ponzi Scheme
According to the SEC, the defendants defrauded over 17,000 retail investors on their way to raising raised over $1.7 billion. The Schneider and Gentile allegedly “lied to investors about the source of money used to make an 8% annualized distribution payment to investors.” According to the SEC, the defendants told investors that the distributions were funded entirely by “monies generated by GPB Capital’s portfolio companies” when, in fact, they were partially funded by new investor money. GPB’s scheme allegedly lasted for more than four years. The SEC also alleges that GPB Capital and Ascendent Capital misled investors about millions of dollars in fees and other compensation paid to Gentile and Schneider.
GPB’s Separation Agreements Violated Whistleblower Protections
The SEC also charged GPB Capital with violating whistleblower protection provisions of the Dodd-Frank Act (DFA). The SEC has taken the position that employer-imposed agreements that might impede the flow of information from employees to the Commission, such as confidentiality agreements or severance agreements. For example, some companies have required employees to certify that they have not shared confidential information with any third party, to alert the employer to any inquiries from government agencies, or to waive their right to the monetary awards that Dodd-Frank directed the SEC to provide to whistleblowers. The SEC alleged that GPB illegally included “language in termination and separation agreements that impeded individuals from coming forward to the SEC.” GPB Capital also allegedly retaliated against a known whistleblower.
Call a SEC Whistleblower Attorney Today
If you are thinking about whether to blow the whistle, or are subject to a confidentiality agreement that you think is illegal, you should contact our experienced SEC whistleblower attorneys today. We can guide you in collecting the documents and evidence you need to convince the SEC to take your case and bring an enforcement action against the company you’re blowing the whistle on.
We have the unique skills and knowledge to represent SEC whistleblowers. As employment attorneys, we understand your rights at work, and can navigate how to protect you. As former defense-side securities lawyers who were hired to defend these kinds of enforcement actions, we also know the ins and outs of securities laws and can help you and the SEC prove the fraud.
Julian Burns King graduated with honors from Harvard Law School and founded King & Siegel in 2018. As head of the Firm’s discrimination and harassment practice areas, she champions the rights of working parents and victims of workplace discrimination and harassment. She has been recognized as a “Rising Star” by Super Lawyers annually since 2018 and has recovered tens of millions of dollars on behalf of her clients.