Offices in Irvine and Texas : Precious Metals Broker Shut Down by Regulators
State and federal regulators, acting on complaints by customers who said they have been bilked of their investments, have shut down First International Trading Corp., a San Francisco-based precious metals broker with offices in Irvine, Dallas and Houston.
FITC’s assets were frozen and its business records were seized Wednesday as part of a yearlong state and federal government crackdown on firms that illegally sell precious metals to investors on credit and for deferred delivery.
“We believe there are several thousand customers and several million dollars involved” in the FITC case, said Arthur Salzberg, Western regional enforcement chief for the federal Commodity Futures Trading Commission.
The commission filed a complaint Tuesday in federal court in San Francisco charging that the firm’s five-year deferred delivery contracts for gold and silver are illegal because they involve futures contracts not traded on a regulated commodities exchange.
The complaint also alleged that the company misrepresented itself as being a registered commodities broker, failed to disclose that some of its principals have been convicted of business-related crimes and falsely stated that customer funds were kept separate from company funds.
Based on the commission’s complaint, the court issued an order Tuesday allowing investigators to halt FITC’s operations.
A hearing on the commission application, which seeks a temporary restraining order and the appointment of a receiver to take control of FITC funds, has been set for Feb. 21 before U.S. District Judge Eugene Lynch.
Not Aware of Complaints
In a telephone interview Thursday, Gene Pulley, general manager of FITC’s Irvine office, said he is not aware of any customer complaints. He said that the company is prepared to prove in court that FITC’s deferred delivery program is “perfectly legal.”
Pulley said the company employs about 180 account executives in all, with about 40 of them in the Irvine office, which was opened last December.
Pulley said FITC will honor all financial commitments to its customers and will process any client request to liquidate their holdings and return the proceeds. But the commission’s Salzberg said that would be impossible because the court order prohibits the company from returning customer funds because the firm’s assets are frozen.
