What You Need to Know
- L.A. firm Lear Capital allegedly failed to disclose millions of dollars in commissions it charged older and other investors in New York.
- The company also allegedly violated New York laws requiring commodity broker-dealers and telemarketers to register with the state.
- N.Y. Attorney General Letitia James had sued the firm in June.
A Los Angeles-based precious metals dealer and its founder have been ordered to pay $6 million for allegedly failing to disclose millions of dollars in commissions the company charged investors in New York. The firm also failed to register properly with the state.
As part of a consent order that was filed in New York Supreme Court in Erie County on Monday, Lear Capital and its founder, Kevin DeMeritt, were also ordered to modify their business practices in New York.
Lear agreed to provide New York residents with “clear and conspicuous disclosures of its fees and to provide a 24-hour cancellation period for retirement and certain higher fee transactions,” according to Letitia James, New York attorney general. Lear will also enhance its New York complaint tracking procedures and provide training to its staff, she said.
The funds will be distributed to eligible New York customers harmed by Lear’s misconduct, she pointed out while announcing the consent order.
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“Lear is pleased to put this matter behind it,” according to Seth E. Pierce, counsel for Lear, who is a partner at the law firm Mitchell Silberberg & Knupp in Los Angeles. “Lear has always believed that its transaction process was best in class, but looks forward to further enhancing that process and resuming operations in New York,” he said in a statement provided to ThinkAdvisor on Tuesday.
In her complaint, filed June 17, James alleged that Lear connived investors — many of whom were senior residents of Western New York who were looking to safeguard their retirement savings — to invest tens of millions in precious metals.
The suit alleged that Lear did that while fraudulently charging undisclosed commissions of as much as 33% on millions of dollars in sales, and in violation of New York laws requiring commodity broker-dealers and telemarketers to register with the state.