FINRA Issues Investor Alert Regarding Precious Metals

FINRA recently issued a new Investor Alert called “Physical Precious Metals: Tips to Avoid Tarnishing Your Portfolio,” which cautions investors about the risks of investing in physical precious metals, such as silver, gold, palladium, and platinum. Precious metals are known for price movements that attract investor interest during market swings, and that interest can generate high-pressure sales tactics and fraud.

Recent enforcement actions by the Commodity Futures Trading Commission (CFTC) and court decisions demonstrate that sellers can charge high commissions and fees while failing to purchase or deliver the physical assets as promised. In a recent CFTC case, for example, the U.S. District Court for the Southern District of Florida ordered $2.5 million in monetary sanctions against Vertical Integration Group, LLC, and its managing members, Richard V. Morello and Junior Alexis, for illegal precious metals transactions. In another verdict, the U.S. District Court for the Southern District of Florida ordered Hunter Wise Commodities, LLC, Hunter Wise Services, LLC, Hunter Wise Credit, LLC, and Hunter Wise Trading, LLC and the individuals running the companies, Fred Jager and Harold Edward Martin, Jr., to pay more than $108 million in restitution and penalties.

To avoid being a victim, FINRA suggests the following precautions:

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