SEC $76 Million Judgement Against Red Rock Secured

In a major legal victory, the SEC has secured a $76 million judgment against Red Rock Secured LLC and its top executives for defrauding retirement account holders

Bullion.Directory News, 7 May 2024
By Alice Walker
Investor Relations Manager at Bullion.Directory

From 2017 to 2022, the company, now known as American Coin Co., along with CEO Sean Kelly and managers Anthony Spencer and Jeffrey Ward, were found to have misled investors into buying overpriced gold and silver coins, costing victims over $50 million.

The judgment includes significant fines and permanent bans from certain financial activities for the individuals involved​​.

According to the SEC’s findings, these coins were sold at markups reaching 130%, a stark contrast to the 1-5% initially claimed. The court’s decision includes significant disgorgement sums and civil penalties for each defendant and permanently prohibits Kelly from serving as an officer or director of a public company.

This case is a part of a broader crackdown on financial fraud targeting vulnerable investors, specifically those managing retirement savings. State regulators from California and Hawaii, alongside the Commodity Futures Trading Commission (CFTC), have also secured judgments in parallel actions, ensuring a comprehensive approach to justice and restitution for the affected investors.

Regal Assets Case:
Regal Assets LLC, a Southern California-based dealer, faced a $21 million lawsuit filed by the California Department of Financial Protection and Innovation (DFPI) and the Commodity Futures Trading Commission (CFTC).

The lawsuit, which alleges that Regal Assets misappropriated funds from over 120 customers between November 2019 and October 2022, claims the firm diverted customer funds meant for precious metals purchases to cover business and personal expenses while providing misleading information to customers. The legal actions seek disgorgement, full restitution, and other penalties​
​​
Metals.com Case:
Similarly, Metals.com was charged along with associated entities (Chase Metals LLC, Chase Metals Inc., and Barrick Capital Inc.) in a $185 million fraud scheme that affected over 1,600 elderly investors across the U.S.

This case, which involved marking up prices of precious metals significantly over market values—sometimes by 300%—resulted in nearly all investors losing the majority of their funds. The fraud, dating back to 2017, involved convincing elderly victims to transfer their retirement savings into self-directed IRAs to purchase these overpriced metals. The CFTC and 30 states collaborated in this largest joint filing in the agency’s history, resulting in the freezing of the defendants’ assets and ongoing legal proceedings seeking restitution and penalties​.

These cases underscore a troubling trend of exploitation within the precious metals market, where misleading sales tactics and inflated prices have jeopardized the financial security of vulnerable investors, particularly the elderly.

The SEC and other regulatory bodies continue to emphasize the importance of diligence and transparency in the commodities market to protect investors from such deceptive practices.

The SEC credits the diligent efforts of a team from its New York Regional Office for bringing this case to a successful resolution, highlighting the agency’s commitment to protecting investors and maintaining the integrity of the financial markets.

For more detailed information on this case, visit the SEC’s official announcement.

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