The North American Securities Administrators Association (NASAA) recently released its 2022 Enforcement Report. The report contained a section on elements of the precious metals industry. This is what it said:
Bad actors are using contemporary macroeconomic factors – such as volatility in the markets and federal monetary policy – as a tool to more effectively market traditional scams. For example, in recent precious metals scams, many promoters have been using deception and emotion to prey on financial fear. They often use headlines to stoke further the fear and concern over the potential adverse impact on retirement savings. On the other hand, they have been using deception and emotion to sell hope, claiming concerned investors can prevent wholesale losses by liquidating equities and using the proceeds to purchase precious metals.
U.S. members are working together, coordinating their efforts to shut down nationwide scams and address significant misconduct. They are also joining with the Commodity Futures Trading Commission (CFTC) and filing joint enforcement actions to ensure the protection of investors throughout the nation. In 2020, for example, 30 state securities regulators and the CFTC obtained injunctive relief and a receivership against TMTE Inc. aka Metals.com in the Northern District of Texas. The complaint pleaded grave facts – the company and affiliated defendants used traditional and social media marketing to lure more than 1,600 investors, including at least 1,300 elderly victims, in a scheme that involved more than $140 million in retirement savings. It also alleged virtually every investor lost the majority of their funds.
More recently, in 2021, state securities regulators began investigating Safeguard Metals LLC and Jeffrey Santulan, its principal. Earlier this year, the California Department of Financial Protection and Innovation, along with 26 state securities regulators and the CFTC, filed a federal lawsuit against Safeguard, Santulan and related parties in the Central District of California. The complaint alleged the firm preyed on fear, creating a sense of urgency and encouraging prospective clients to remove their savings from the stock market to avoid significant loss. It also allegedly advised clients to liquidate their traditional retirement accounts and transfer the proceeds into self-directed IRAs to purchase coins that were marked up as much as 71 percent. More than 450 mostly elderly retail investors were victimized by the scheme, according to court filings.