An industry member was recently hit with a $900,000 arbitration award. The arbitration was handled by the American Arbitration Association. What is most interesting about the Award is that the bulk of the $900,000 was made up of the delta between the custodian's melt value and what the customer spent. There were several aggravating factors that the arbitrator listed:
- The two salespersons at issue called the client approximately four times a week.
- “Using materially false and misleading statements through its website and by its sales representatives.”
- Promising investment advisory services with the following statements:
“…you can have an advantage over conventional investors that covers a wide range of asset building opportunities.”
“[we] help our clients diversify their retirement portfolios with non-traditional investment options.”
“Our asset protection specialists will thoroughly explain all aspects of investing into precious metals. … you will have experienced professionals… by your side every step of the way.”
- Claiming to be a fiduciary.
- Providing self-interested investment advice.
- Misrepresenting and concealing mark-ups and providing materially false and inflated valuations of the customer’s account (sending an account statement with retail price as the value of the account).
- Telling the customer that he did not have to read the Shipping and Account Agreement.
- Swapping .999 Silver Guinea coins for .9999 Silver Polar Bear coins.
Beyond the above problematic behavior, a key takeaway is that all of the conduct was undertaken by two salespersons working in tandem. And there are several more arbitrations that have been filed based upon the conduct of the duo.