Retirement Savings Targeted to Purchase Crypto Coins by Red Rock Secured

Crypto assets have become a key focus for the SEC in recent years. With Congress not taking any meaningful action in the area, SEC Chair Gensler added positions to the Enforcement Division to focus on the abuses taking place in the crypto space.

Last year DOJ joined the fight, forming a network of prosecutors to help clean up the area in the wake of President Biden’s March 9, 2022 Executive Order on the topic. Nevertheless, the cases keep on coming. A good example is the case filed on May 15, 2023 by the Commission in which over 700 lost at least part of their savings after being targeted to purchase Red Rock Premium Coins with their retirement funds by an outfit called Red Rock Secured.

SEC v. Redrock Secured, LLC, Civil Action No, 2:23-cv-03682 (C.D. Cal. Filed May 15, 2023) is an action which names as defendants: the firm and three of its executives, Sean Kelly, Anthony Spencer and Jeffrey Ward. Over a period of about five years, beginning in early 2017, Defendant Kelly, the CEO of the firm, and Defendants Spencer and Ward, sought to and often did, persuade investors to liquidate their retirement accounts and purchase what were called Red Rock premium coins to “protect” their retirement accounts. The Red Rock executives typically told potential investors that the markup to acquire the coins was minimal since the maximum was about 29% pf the cost of what they called premium metals. In making this sales pitch the executives claimed that the market value of the coins was substantially higher than that reported.

The claims were false. Nevertheless, at least 700 investors paid over $50 million to secure the coins, The complaint alleges violations of Exchange Act Section 10(b) and Advisers Act Sections 206(1) and 206(2). The case is in litigation, See Lit. Rel. No, 25727 (May 145, 2023).