A toxic private equity fund complex that’s plunged multiple broker-dealers into regulatory and legal trouble has now brought one big Georgia firm to a premature end.
Kalos Capital, a firm in the Atlanta suburbs run by Daniel and Carol Wildermuth, filed for Chapter 11 protection in a federal bankruptcy court on Monday. According to the bankruptcy statement, Kalos, which once boasted 100 registered producers, $28.5 million in revenue and 60 offices, was finally overwhelmed by litigation relating to GPB Capital Holdings LLC. The New York-based private equity firm sold private placements in its funds, and Kalos reps recommended them from 2014 to 2018. GPB’s ex-chief executive was later arrested and the PE company was condemned for Ponzi-scheme-like activity by the SEC. Afterwards, the lawyers came calling, and many clients have turned on the broker-dealers who sold GPB’s private placements, saying these non-registered private placement notes were illiquid, opaque and unsuitable for most investors.
The troubled GPB funds have gotten a number of other broker-dealers pinched by Finra this year: Among the firms stung by Finra fines in the GPB debacle in are National Securities Corporation, Capital Investment Group, Sanctuary Securities, Dempsey Lord Smith, BD4RIA, and Geneos Wealth Management. Massachusetts Secretary of the Commonwealth William Galvin said in…
