DAI Securities Limited Liability Company has agreed to pay a fine of $50,000 as part of a settlement with the Financial Industry Regulatory Authority (FINRA).

From May 14, 2018, to June 29, 2018, DAI Securities negligently failed to inform four investors that, in connection with an offering involving GPB Capital Holdings, LLC, the issuer had failed to timely file necessary documents with the U.S. Securities and Exchange Commission, including submitting audited financial statements.

GPB Capital is an alternative asset management firm headquartered in New York, established in 2013, serving as the general partner of limited partnerships formed to acquire income-producing companies. From 2013 to 2018, GPB Capital launched several limited partnerships, each focused on acquiring controlling interests in certain privately held sector companies.

GPB Capital's limited partnerships include the GPB Automotive Portfolio, LP, established in 2013, aimed at acquiring and operating automotive dealerships.

On April 27, 2018, GPB Capital issued a significant update regarding its audited financial statements for certain limited partnerships, sending letters to broker-dealers selling investments related to GPB Capital, including DAI Securities, stating that GPB Capital was registering certain securities categories for issuance, including the automotive portfolio, with the U.S. Securities and Exchange Commission (SEC).

As part of this process, the automotive portfolio was required to submit audited financial statements. These letters further stated that due to an ongoing forensic audit, the delivery of the automotive portfolio's audited financial statements would be delayed (originally due on April 30, 2018). Specifically, GPB Capital disclosed that it and its auditors "decided to engage a third-party firm to complete a forensic audit in an effort to conclude [former partners] counterclaims and other allegations."

The offering documents for the automotive portfolio were not timely amended to disclose the partnership's delay in submitting its audited financial statements to the U.S. Securities and Exchange Commission.

Despite receiving correspondence from GPB Capital notifying them of the delay and GPB Capital's intention to complete the forensic audit, DAI Securities sold limited partnership interests in the automotive portfolio to four clients after this announcement.

The principal value of these four sales, occurring between May 14, 2018, and June 29, 2018, totaled $300,000. DAI Securities earned a total commission of $25,500 from these sales.

However, in connection with these four sales, DAI Securities failed to inform clients of the automotive portfolio's failure to timely submit audited financial statements to the U.S. Securities and Exchange Commission or the reasons for the delay. The failure to timely submit audited financial statements and the reasons for the delay were material information that should have been disclosed.

By negligently omitting material facts, DAI Securities violated FINRA Rule 2010. In addition to paying a $50,000 fine, the company also agreed to be censured and to provide partial restitution in the amount of $25,500.