(FRN - Financial Regulation News) - The Securities and Exchange Commission (SEC) has outlined charges against Red Rock Secured LLC and three individuals regarding an alleged fraudulent scheme targeting investor retirement accounts.
The SEC complaint alleges El Segundo, California-based Red Rock Secured LLC, its CEO, Sean Kelly and two of its former Senior Account Executives, Anthony Spencer and Jeffrey Ward, convincing hundreds of investors to sell securities in their retirement accounts to buy gold and silver coins at prices that included markups greater than the defendants had promised.
Through its complaint, the SEC said that, since at least 2017, the defendants repeatedly solicited investors through false and misleading statements, telling them to “protect” their retirement savings by selling securities held in their federal employee Thrift Savings Plan accounts, 401(k) plans, and Individual Retirement Accounts to invest in gold or silver coins at a 1 to 5 percent markup.
According to the SEC allegations, Red Rock charged as much as 130 percent in markups, which allowed them to pocket more than $30 million of the more than $50 million they received from investors.
“As our complaint alleges, the defendants used fear and lies to defraud investors out of millions of dollars from their hard-earned retirement savings,” SEC New York Regional Office Director Antonia M. Apps said. “We will investigate and charge similar schemes that target investor retirement accounts.”
The SEC’s complaint charges Red Rock LLC, Kelly, Spencer and Ward with violating the antifraud provisions of the federal securities laws, with the agency seeking permanent injunctions, disgorgement of allegedly ill-gotten gains, plus interest, and civil penalties, as well as an officer and director bar as to Kelly.
By Douglas Clark
May 18, 2023