Arkansas Securities Department announces plans for Lear Capital bankruptcy victims

The Arkansas Securities Department (ASD) 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, Lear will provide $5.5 million to be distributed to investors in Lear’s precious metals. 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.

“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 Campbell McLaurin, ASD interim commissioner.

“The ASD has investigated several precious metals investment schemes, such as Lear. Investors are advised to check the registration of investment products and professionals, diligently research investments, and ask tough questions about fees, risks, and potential returns. If the answers seem too good to be true, protect your wallet by walking away. The ASD is always looking out for Main Street investors to protect them from harmful and deceptive business practices,” McLaurin added.

As a part of Lear’s bankruptcy plan, the company has agreed to improve its sales practices and disclosures, including not misrepresenting its fee, not offering portfolio assessments of securities holdings, not holding itself out as an investment adviser in any way, and not providing investment advice or committing securities or commodities fraud.

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