Texas Joins Multi-State Group to Recover Overcharges for Investors In Commodity Firm Lear Capital Bankruptcy

Aug 2

August 2, 2023 – The Texas State Securities Board (TSSB) announces investors who purchased retail precious metals from Lear Capital will receive compensation as a part of Lear’s bankruptcy plan. State securities regulators had been investigating Lear for deceptive securities and commodities activities and misleading marketing leading up to the company’s bankruptcy.

 Under the terms of the bankruptcy plan, Lear will provide $5.5 million to be distributed to investors who purchased precious metals from Lear. Lear investors who 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 who bought precious metals from Lear between January 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 fees, offer portfolio assessments of securities holdings, hold itself out as an investment adviser in any way, and provide investment advice or commit securities or commodities fraud.

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 profited millions of dollars at investors’ expense. 

Various regulators alleged 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.

The TSSB urges investors to investigate any precious metals investment before sending money to the promoter. Investors can better protect themselves by taking the following steps:

  • Before investing with someone who claims to be a financial professional, verify he or she is registered by contacting your local state securities regulator - https://www.nasaa.org/contact-your-regulator/.  
  • Don’t fall for claims of guaranteed returns.  All investing involves risk and there are no guarantees.
  • Understand self-directed individual retirement accounts allow savers to invest in a broad range of “alternative assets” such as precious metals, real estate, cryptocurrencies, promissory notes, and private placement securities. These accounts provide investors with more investment options but also present greater risks.
  •  Avoid high-pressure sales tactics or anyone trying to elicit an emotional response- especially fear or anxiety. Never make a hasty investment decision. Be sure you understand the product, its costs, and associated risks.
  • Investments cost money and salespersons often earn commissions.  The financial professional working with you is required to disclose how they assess fees to your account, how they make money, and how much. Always ask for this information upfront.

The TSSB would like to recognize the quality efforts of Abigail Rushing Ryan, Texas Attorney General’s Office, Bankruptcy Regulatory Section; Karen Cordry, Bankruptcy Counsel, National Association of Attorneys General; and Max F. Brauer, Senior Assistant Attorney General, Maryland Securities Division.

Contact : TSSB Enforcement Division at enforceinfo@ssb.texas.gov