States recoup overcharges for investors in commodity firm bankruptcy
Investors that purchased retail precious metals from Lear Capital will receive compensation as a part of Lear’s bankruptcy plan.
The Ohio Department of Commerce Division of Securities along with other state securities regulators had been investigating Lear for deceptive securities and commodities activities and misleading marketing at the time of the company’s bankruptcy.
Under the terms of the bankruptcy plan, Lear will provide $5.5 million to be distributed to investors in Lear’s precious metals. Lear investors that filed a timely bankruptcy claim will receive refunds based on calculations determined by Lear’s bankruptcy plan.
In addition, Lear will provide a pro rata distribution of the remaining funds to investors who did not file claims. The pro rata distribution applies to investors that bought precious metals from Lear between Jan. 1, 2016, and March 3, 2022.
As a part of Lear’s bankruptcy plan, the company has also agreed to improve its sales practices and disclosures, including agreeing not to misrepresent its fee, not to offer portfolio assessments of securities holdings, not to hold itself out as an investment adviser in any way and not to provide investment advice or commit securities or commodities fraud.
From 2014 to 2019, Ohio investors conducted more than 2,000 sale transactions with Lear Capital.
“Lear Capital urged investors to liquidate their traditional retirement savings and buy precious metals without proper fee disclosures, and as a result of those deceptive practices, the company racked up millions of dollars at investors’ expense,” said Ohio Securities Commissioner Andrea Seidt.
Various regulators had alleged that the Los Angeles-based company, which sells and buys back metals through both direct-to-consumer transactions and self-directed IRA transactions, used deceptive business practices and violated investor protection laws. These actions were resolved as part of the $5.5 million bankruptcy settlement.