Taking a direct shot at high-pressure sales methods, Massachusetts Secretary of the Commonwealth William Galvin filed a complaint on Tuesday against TMTE Inc., which also does business as Metals.com. TMTE was charged with convincing six investors in Massachusetts to liquidate their retirement accounts and buy gold and silver coins; TMTE then collected markup fees in the range of 53%-63%, the division stated.
Six investors, all around the age of 60, lost more than $1.7 million due to these actions from January 2008 to July 2019, according to the complaint.
Based in Cheyenne, Wyoming, TMTE sells precious metals across the country by phone and via its website (Metals.com). The firm, which has an office in Beverly Hills, California, is not registered to sell securities in Massachusetts.
According to the complaint, TMTE convinces potential clients to transfer some or all of their retirement accounts — including 401(k)s — to a self-directed precious metals IRA, pushing as a reason the instability of the stock market. In late 2016, TMTE contacted at least six Massachusetts residents.
In the case of a married couple, a doctor and a nurse practitioner, TMTE convinced them to open accounts for a minimum account size of $500. “Despite this verbal agreement, TMTE used blank forms signed by the investors to facilitate the total liquidation of both investors’ retirement accounts,” the Commonwealth said.
Assets from one of them were transferred to a Kingdom Trust IRA, although the individual was not aware that all their savings were being transferred. The amount to purchase the coins was close to $2 million, although only $900,000 was for the silver.
The rest, or the “spread,” went to TMTE and was just over 54% of the purchase price. According to the securities transaction agreement, it should be a maximum of 29%.
When the investor realized their full accounts were transferred to the IRA, not just a portion, they called TMTE to complain and were told they would incur high fees if they reversed the transaction. Similar actions were taken with other investors, according to the complaint.
Galvin’s Securities Division seeks to force TMTE to cease and desist doing any business in the state, censure the TMTE employees who were involved, disgorge any profits and make restitution to individuals, permanently bar the firm from acting as an investment advisor and impose a fine.
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