GPBWilliam Galvin, the Massachusetts secretary of state, has initiated a probe into the activities of broker-dealer firms who sold private placements sponsored by GPB Capital Holdings, according to news reports. The Massachusetts Securities Division has reportedly received information regarding the sales practice of a certain firm, and has requested information from a total of 63 involved in the sales of GPB Capital Holdings private placements. The probe follows an announcement that they have “temporarily stopped bringing in new funds and suspended redemptions” as it turns to examine accounting and financial reporting practices, according to ThinkAdvisor.

These reports also state that two of the private placements in question failed to meet filing deadlines with the Securities and Exchange Commission, despite requirements otherwise. Those private placements are GPB Automotive Portfolio and GPB Holdings II, according to InvestmentNews. Meanwhile GPB is involved in a lawsuit against “a former business partner who allegedly failed to follow through” in connection to a multimillion-dollar car dealership transaction, per ThinkAdvisor. The Securities Division will consequently scrutinize sales activity, disclosure and marketing data from 63 broker-dealers that sell GPB’s private placements.

Massachusetts Secretary of State William Galvin said in a statement: “While my Securities Division’s investigation is in the very nascent stages, recent activity within the company 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, have led to this investigation… I must also express my serious concerns regarding the expected proposal by the SEC to expand who can participate in private securities offerings. Without a strong fiduciary rule to prevent sales practice abuses, it is utter folly not to know that main street investors will be hurt.”

Meanwhile GPB Holdings said in a statement: “GPB Capital Holdings, LLC is aware that certain broker-dealers have received requests for information from the Commonwealth of Massachusetts. GPB Capital is not in a position to comment on that matter. As we have previously disclosed to investors, GPB Capital is in the process of completing the audits of the financial statements for certain of its funds and is currently not accepting new capital from investors until that process is complete.”

According to the company’s website, GPB Capital Holdings is an alternative asset management firm based in New York. It focuses on the acquisition of “income-producing private companies,” according to its description, and offers companies in its portfolio “strategic planning, managerial insight and capital.” It has raised $1.5 billion in capital and has more than 5,500 employees in its portfolio companies, of which it has more than 160.