The Securities and Exchange Commission (SEC) has announced charges against Red Rock Secured LLC, a company based in El Segundo, California, along with its CEO, Sean Kelly, and two former Senior Account Executives, Anthony Spencer and Jeffrey Ward. The charges are related to a fraudulent scheme where the defendants allegedly convinced hundreds of investors to sell securities in their retirement accounts to purchase gold and silver coins at prices that included significantly higher markups than promised.
According to the SEC’s complaint, since at least 2017, the defendants allegedly made false and misleading statements to solicit investors. They claimed that by selling securities held in their retirement accounts, such as federal employee Thrift Savings Plan accounts, 401(k) plans, and Individual Retirement Accounts, investors could “protect” their savings and invest in gold or silver coins with only a 1 to 5 percent markup. However, Red Rock actually charged markups as high as 130 percent, allowing them to pocket over $30 million of the $50 million received from investors.
Antonia M. Apps, Director of the SEC’s New York Regional Office, stated, “The defendants used fear and lies to defraud investors out of millions of dollars from their hard-earned retirement savings.” The SEC is committed to investigating and charging similar schemes that target investor retirement accounts.
The SEC’s complaint, filed in the U.S. District Court for the Central District of California, accuses Red Rock, Kelly, Spencer, and Ward of violating antifraud provisions of federal securities laws. The SEC seeks permanent injunctions, disgorgement of ill-gotten gains with interest, civil penalties, and an officer and director bar for Kelly.
The SEC’s investigation was led by Michael Ellis and Elzbieta Wraga of the SEC’s New York Regional Office, supervised by Hane L. Kim of the Retail Strategy Task Force and Tejal D. Shah of the New York Regional Office. Assistance was provided by Alex Lefferts of the Enforcement Division’s Office of Investigative and Market Analytics. The litigation will be overseen by Jack Kaufman. The case emerged from the Division of Enforcement’s Thrift Savings Plan Initiative, which focuses on potential misconduct targeting government employee retirement accounts. The SEC acknowledges the assistance of the Federal Retirement Thrift Investment Board, Commodity Futures Trading Commission, and state regulators associated with the North American Securities Administrators Association.
In addition, the SEC’s Office of Investor Education and Advocacy and the Division of Enforcement Retail Strategy Task Force have issued an Investor Alert to provide tips to Thrift Savings Plan investors on how to avoid fraud.