U.S. derivatives and securities regulators brought joint enforcement action against a precious metals dealer they allege is targeting elderly investors in an ongoing US$68 million fraud scheme.
The U.S. Commodity Futures Trading Commission (CFTC) and the North American Securities Administrators Association announced that 27 state securities regulators joined the CFTC in filing a civil enforcement action against California-based Safeguard Metals LLC and its founder Jeffrey Santulan. The action alleges they defrauded investors into buying overpriced silver coins and other precious metals.
Separately, the U.S. Securities and Exchange Commission (SEC) charged Safeguard Metals and Santulan for allegedly violating federal securities laws.
Regulators allege that investors were deceived into purchasing precious metals through “false and misleading statements,” including statements about the risk and safety of their investments in traditional retirement accounts.
According to the SEC, investors were told that the market was going to crash, and that their retirement accounts would be “frozen under a new ‘unpublicized’ law.”
The SEC also alleged that investors were charged average markups of approximately 64% on sales of silver coins, instead of the 4% to 33% that was disclosed.
The allegations have not been proven.
Regulators are seeking permanent bans, disgorgement of allegedly ill-gotten gains, plus interest, and civil penalties.