If you have been actively following the US stock market, you must have come across the news around GBP Capital at least once. This company has been all over in the media reports lately for wrong reasons.

Its auditor resigned overnight, a former business partner sued it in the court, almost every regulatory authority agency in the US has a pending case against it, and many other things that didn’t go the way GBP Capital promoters wanted.

At present, the common investors who put their money in GBP Capital are confused and panicked due to the chaotic situation in the market. If you are also one of them, it’s important to know whether the lawsuit filed against the company is legit, or just a scam carried out to demolish its image. Let’s find out more about it.

GBP Capital Lawsuit:

Back in 2018, when many media outlets reported how screwed up the financials of GBP Capital were, the news that took the world by storm was about its auditor’s resignation. The company announced in November 2018 that its auditor, who was taking care of all the GBP Partner companies, resigned without notice. The company didn’t give a reason when asked by many journalists.

A couple of months before it happened, a former compliance officer filed a lawsuit against the company, saying that her broker sold GBP holdings securities at a time when several red flags were visible. A few months passed by before another controversy took place. In June 2019, NFS (National Finance Services) removed GBP from operating on its platform and asked all of its clients to move to another custodian firm within a short span of 90 days. All of these events reduced GBP’s valuation to less than 25% of its market capitalization a few months back.

GBP’s downfall was similar to the case of Linn Energy that faced multiple allegations from different stakeholders. All in all, it’s a clear example of how unethical market practices can take down a billion-dollar firm within a matter of a few years. So, next time when you decide to invest in a company, make sure you go through its balance sheet thoroughly before taking the final call.