Tenn. Commerce & Insurance Dept.: States Recoup Overcharges For Investors In Commodity Firm Bankruptcy

NASHVILLE, Tennessee, Aug. 3 -- The Tennessee Department of Commerce and Insurance issued the following news:

The Securities Division of the Tennessee Department of Commerce & Insurance ("TDCI") has announced that 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 at the time of the company's bankruptcy.

Under the terms of the bankruptcy plan approved by the U.S. Bankruptcy Court in Delaware, Lear will provide $5.5 million to be distributed to investors in Lear's precious metals. The $5.5 million distribution is for all Class 3 claims which are general unsecure claims including but not limited to customers of 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 that 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 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.

"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 TDCI Commissioner Carter Lawrence. "TDCI is always looking to protect Tennessee investors from harmful and deceptive business practices. We are glad that Tennesseans that were harmed by these deceptive practices will receive assistance."

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 allegations were resolved as part of the $5.5 million bankruptcy settlement.

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Original text here: https://www.tn.gov/commerce/news/2023/8/2/states-recoup-overcharges-for-investors-in-commodity-firm-bankruptcy.html