Michael Sievert, a stockbroker with Arkadios Capital of Jacksonville, Florida has been the subject of five customer complaints since 2019, according to his FINRA BrokerCheck Report. Each of the customer complaints involves an investment into GBP Capital Holdings. One of the customer complaints is still pending, the remaining four were settled for a total of $467,006.76.

Customer Complaints Against Michael Sievert

In the pending customer case, one of Michael Sievert’s former clients is seeking $200,000 in damages based on allegations that Sievert, as an agent of Arkadios, engaged in negligence, breach of fiduciary duty, and breaches of Florida’s securities laws in the sale of GPB Capital. The four settled cases made similar accusations that Sievert allegedly failed to use reasonable due diligence on the alternative investments, and he made omissions and misrepresentations to his clients regarding their GPB Capital investments.

One customer complaint against Michael Sievert was settled for $78,000.00 following a FINRA arbitration complaint alleging unsuitable investment recommendations and advice concerning GPB Holdings LLC. Another FINRA customer complaint involving Michael Sievert was resolved for $50,000.00 in damages following allegations of unsuitable recommendations made by one of his clients. The unsuitable recommendation again involved GPB Holdings and GPB Automotive while Sievert was working for Arkadios Capital.

Another FINRA securities arbitration claim concerning Michael Sievert was settled for $250,000. The claimant in that case alleged that Sievert recommended unsuitable investments in GPB to his clients and persuaded them to purchase these investments through Sievert and Arkadios Capital.

GPB Capital Holdings Investments

As previously covered in this space, GPB Capital reported “significant losses” in its funds in 2019 with its two largest funds seeing declines of 25.4% and 39%. Investment News reported in March 2019 that GPB Capital Holdings was under investigation by the FBI, the SEC, and the Financial Industry Regulatory Authority (“FINRA”).

In 2021, the firm’s founder and other high-level executives were charged with securities fraud, wire fraud, and conspiracy for engaging in a scheme to defraud investors by misrepresenting the source of funds used to make monthly distribution payments

GPB reportedly raised over $1.8 billion from wealthy investors through private placement funds, which invest in auto dealerships and the waste management industry. The firm reportedly paid over $100 million in commission incentives to over sixty brokers to sell GPB’s Regulation D offerings to their clients.

Stockbrokers Must Make Suitable Investment Recommendations

FINRA’s Rule 2111 requires stockbrokers to have a “reasonable basis” to believe that a recommended transaction or investment strategy involving a security or securities is suitable for the customer. To aid in this requirement, brokers are also obligated to know the essential facts concerning their client. Some of the factors included in a suitability analysis should include (but not be limited to) a customer’s age, other investments, financial situation and needs, tax status, investment objectives, investment experience, investment time horizon, liquidity needs, risk tolerance, and any other customer-disclosed information.

Additionally, FINRA Rule 3110 requires brokerage firms, like Moloney Securities, to establish, maintain, and enforce a system to supervise all of their stockbrokers’ activities to achieve compliance with federal securities laws and regulations, as well as FINRA’s rules.