Litigation Release No. 25727 / May 15, 2023

Securities and Exchange Commission v. Red Rock Secured, LLC et al., No. 2:23-cv-03682 (C.D. Cal. filed May 15, 2023)

SEC Charges Red Rock Secured, Three Executives in Fraud Scheme Targeting Retirement Accounts

The Securities and Exchange Commission today announced charges against El Segundo, California-based Red Rock Secured LLC, its CEO, Sean Kelly, and two of its former Senior Account Executives, Anthony Spencer and Jeffrey Ward, in connection with a fraudulent scheme that involved convincing hundreds of investors to sell securities in their retirement accounts to buy gold and silver coins at prices that included markups far greater than the defendants had promised.

According to the SEC's complaint, since at least 2017, the defendants repeatedly solicited investors through false and misleading statements, telling them to "protect" their retirement savings by selling securities held in their federal employee Thrift Savings Plan accounts, 401(k) plans, and Individual Retirement Accounts to invest in gold or silver coins at only a 1 to 5 percent markup. In reality, Red Rock charged as much as 130 percent in markups, which allowed them to pocket more than $30 million of the more than $50 million they received from investors.

The SEC's complaint, which was filed in U.S. District Court for the Central District of California, charges Red Rock, Kelly, Spencer, and Ward with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940, and also charges Kelly, Ward, and Spencer with aiding and abetting Red Rock's violations and Kelly as a control person within the meaning of Section 20(a) of the Securities Exchange Act of 1934. The SEC is seeking permanent injunctions, disgorgement of allegedly ill-gotten gains, plus interest, and civil penalties, as well as an officer-and-director bar as to Kelly.

The SEC's investigation was conducted by Michael Ellis and Elzbieta Wraga of the SEC's New York Regional Office and was supervised by Hane L. Kim of the Retail Strategy Task Force and Tejal D. Shah of the New York Regional Office. Alex Lefferts of the Enforcement Division's Office of Investigative and Market Analytics assisted with the investigation. The litigation will be led by Jack Kaufman. This action arises from an investigation generated by the Division of Enforcement's Thrift Savings Plan Initiative, which focuses on potentially improper practices targeting government employee retirement accounts. The SEC appreciates the assistance of the Federal Retirement Thrift Investment Board, Commodity Futures Trading Commission, and state regulators that are members of the North American Securities Administrators Association.

The SEC's Office of Investor Education and Advocacy and the Division of Enforcement Retail Strategy Task Force today issued an Investor Alert to provide tips to Thrift Savings Plan investors on how to avoid fraud.