MD settles with precious metals dealer; purchasers to get refund

The securities division of the Maryland Office of the Attorney General reached a settlement with a precious metals dealer that allegedly operated as an unregistered investment adviser and made material misrepresentations and omissions to Marylanders.

Under the consent order, Gold Silver International Exchange, or GSI Exchange, must refund Marylanders who purchased precious metals from GSI Exchange at any time before July 22, 2021.

The refund comes after GSI Exchange allegedly advised Maryland customers to protect their investments by liquidating certain securities holdings and using the proceeds to open self-directed individual retirement accounts (IRAs) to purchase precious metals from GSI Exchange.

According to the consent order, GSI Exchange failed to disclose risks inherent in liquidating securities to purchase precious metals and instead “made various unverified claims regarding the reliability and safety of, and protection afforded through, precious-metals investments as opposed to traditional securities.” The dealer also claimed that precious metals would safeguard wealth.

The settlement was reached with GSI Exchange and its senior partner, Anthony Allen Anderson.

“It is our office’s duty to protect Marylanders from financial predators and unsavory business practices,” said Attorney General Anthony Brown in a news release. “People who invest their money deserve to know all the facts and risks before making that investment decision. We will not allow companies to defraud our elderly neighbors into giving up their hard-earned savings.”

A spokesperson for GSI Exchange did not respond to The Daily Record’s request for comment.

GSI Exchange sold gold and silver bars, rounds and coins to senior citizens and other Marylanders for investment. Between Aug. 8, 2014 and July 22, 2021, Marylanders invested approximately $400,000 in GSI Exchange’s precious metals, according to the consent order.

In many cases, GSI Exchange advised its clients on the process of selling securities and directly contacted certain broker-dealers and investment advisers to help sell the securities.

According to the consent order, GSI Exchange overstated to customers the amount of risk involved with continuing to hold securities in traditional investment accounts and failed to disclose the amount of a mark-up or spread that GSI Exchange would charge. GSI Exchange also failed to disclose, according to the consent order, the risks involved with purchasing GSI Exchange’s offerings and the fact that GSI Exchange and its employees were not registered to transact business in Maryland as an investment adviser or as investment adviser representatives.