FINRA censured Geneos Wealth Management and ordered the Colorado-based firm to pay $400,000 to settle charges that it improperly sold alternative investments and private placements in LJM Preservation & Growth Fund as well as products issued by GPB Capital Holdings.
According to FINRA's AWC, Geneos brokers unsuitably sold LJM, an alt mutual fund, and failed to inform some customers of LJM's risks, including potential dangers posed by an uncovered options strategy.
Meanwhile, the SEC declared GPB Capital Holdings a Ponzi Scheme in 2021, charging GPB, Ascendant Capital, and CEO/owners David Gentile and Jeffry Schneider with running the nefarious scheme to defraud 17,000 retail investors out of $1.7 billion. The SEC report indicated that GPB furthered its fraudulent enterprise through a nation-wide network of brokers at various firms.
One of these firms, it appears, was Geneos Wealth Management, where FINRA now charged Geneos with negligently failing to disclose to investors material information regarding GPB Capital.
GPB, for what it's worth, drew FINRA's attention in December 2018 for its illiquid, high-risk, and high commission alt investments in its car dealership business, such as GPB Automotive Portfolio LP and Grand Central Automotive.
Although Geneos claims the financial woes were not related to its firm "in any way," FINRA nonetheless found that Geneos failed to supervise its brokers and investment advisers who engaged in improper sales, and furthermore failed to have a reasonable supervisory system for certain transaction activity. FINRA ruled that the firm's failures in this regard rendered it liable for damages incurred by customers, and the firm agreed to settle the charges by paying a $150,000 fine and more than $250,000 in restitution to certain customers who purchased LJM products.
If you invested with Geneos Wealth Management, or with any firm or broker who unsuitably sold LJM Preservation & Growth Fund, GPB Capital Holdings, or another alternative and complex product or mutual fund that has proven harmful to your investments or interests due to its high-risk or high-fee nature, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 for an investigation and consultation. As FINRA's settlement with Geneos indicates, a broker-dealer or advisory firm can be held liable for the actions of its representative if the firm was negligent or failed to supervise its associate.