Additional Information for GSI Exchange

UPDATE As of September 27, 2023

Securities Commissioner Travis J. Iles announced the Texas State Securities Board’s settlement of claims with True Bullion LLC DBA Gold Silver International Exchange DBA GSI Exchange LLC and its principal, Anthony Anderson. The settlement ensures 43 Texas residents, as well as eligible investors residing in other states joining the settlement, can elect to receive a return of principal they invested in precious metals. Clients electing to receive their principal will be required to return precious metals to GSI Exchange, essentially unwinding their transactions.

Texas coordinated its work with securities regulators from Alabama and Arkansas. The Alabama Securities Commission and Texas State Securities Board filed administrative enforcement actions in July 2021, and the Arkansas Securities Department filed a third case in February 2022. The three actions generally alleged that GSI Exchange was acting as an unregistered investment adviser and not disclosing information material to the “spread,” or markup, paid by clients. 

The three agencies thereafter began negotiating a resolution that benefits investors located in the 44 states1 where GSI Exchange sold precious metals. As part of the settlement, state securities regulators operating in those 44 states can elect to participate in a substantively similar resolution with GSI Exchange—meaning that GSI Exchange will also be required to refund principal upon the request of clients residing in those states.

Enforcement Director Rotunda recognized the work of the Alabama Securities Commission and Arkansas Securities Department, as well as the cooperation of GSI Exchange and Mr. Anderson.

LINK: https://www.ssb.texas.gov/news-publications/texas-leads-nationwide-action-against-precious-metals-firm

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As of July 22, 2021:
The Texas State Securities Board (TSSB) and the Alabama Securities Commission (ASC) issued cease and desist orders against TRUE BULLION LLC DBA GSI EXCHANGE, directing it to shut down illegal operations in Alabama and Texas.

The Texas and Alabama orders accuse GSI Exchange of engaging in an illegal advisory scheme involving over $32 million. The scam involves 450 investors many of whom are senior citizens. GSI Exchange allegedly told investors the holdings in their retirement portfolios were high risk and they may lose their assets. GSI Exchange is accused of encouraging these investors to liquidate their securities portfolios and use the proceeds to purchase gold and silver coins to the benefit of GSI through high commissions. The orders allege GSI is taking 25+% of investor funds as an undisclosed commission or fee on the front-end of each precious metals transaction.

The orders name Anthony Anderson as the principal of GSI Exchange. Anderson and GSI Exchange are not registered or notice-filed to provide investment advice in Texas or Alabama (as required by state securities law).

For further information:
Investors can contact the ASC at [email protected] and visit its website at https://asc.alabama.gov/ and they can contact the TSSB at [email protected] and visit its website at https://www.ssb.texas.gov/.

Link: https://www.ssb.texas.gov/news-publications/state-securities-regulators-texas-and-alabama-team-protect-senior-investors-and

As of August 28, 2023

A Consent Order regarding unregistered investment adviser activity and untrue statements of material fact made in connection with the sale of precious metals in Arkansas by True Bullion, LLC d/b/a GSI Exchange (“True Bullion”). The Consent Order finds that True Bullion will offer a refund to those investors who purchased precious metals prior to July 22, 2021. This order settles the Cease and Desist Order No. S-21-0009-22-OR02 entered against True Bullion on February 9, 2022.

This Order is not intended to be deemed or used as (a) an admission of, or evidence of, the validity of any alleged wrongdoing or liability; or (b) an admission of, or evidence of, any
such alleged fault or omission of Respondents in any civil, criminal, arbitration, or administrative proceeding in any court, administrative agency, or other tribunal.

LINK: https://securities.arkansas.gov/legal-documents/true-bullion-llc-d-b-a-gold-silver-international-exchange-d-b-a-gsi-exchange-and-anthony-allen-anderson/

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As of February 9, 2022

A cease and desist order concerning unregistered, fraudulent investment adviser activity conducted in Arkansas was issued.

LINK: https://securities.arkansas.gov/legal-documents/true-bullion-llc-dba-gsi-exchange-llc/

As of September 8, 2023

A Consent Order was entered into with the Alabama Securities Commission which mandates the following:

1. That this Order concludes the inquiry by the Commission and any other possible related action that could be brought or remedy sought under Relevant Laws as it relates to the substance of the Findings of Fact and Conclusions of Law herein, provided however, that the Commission maintains jurisdiction to pursue violations arising by Respondents' failure to comply with the terms and conditions of this Order.

2. This Order is entered into solely for the purpose of resolving the investigations and is not intended to be used for any other purpose, and Respondents neither admit nor deny the Findings of Fact and Conclusions of law herein.

3. The Commission shall not take other adverse action against Respondents related to the matters and conduct at issue in this Order, provided that the Commission may pursue claims arising from Respondents' failure to comply with the terms and conditions of this Order or from conduct not resolved herein, and further may take any action permitted by paragraph 13 of this Order.

4. Respondents shall not violate the Relevant Laws during any future transactions. Moreover, nothing herein shall be construed as having altered GSI' s obligation to comply with all applicable federal, state, and local statutes, rules, and regulations.

5. Respondent GSI shall offer Eligible Customers refunds under the following terms:
a) Eligible Customers shall be those current OSI customers who were, at the time of purchase, a resident of a Participating State who purchased precious metals
from GSI prior to July 22, 2021.
b) Respondent GSI will take reasonable steps to identify a current physical and electronic mail address of all Eligible Purchasers by conducting a review of information set forth in internal notes, databases, payment records, or other internal files, as well as contracts, agreements, powers of attorney, and correspondence sent or received by regular mail or electronic mail.
c) Respondent OSI will notify Eligible Purchasers of the opportunity to elect to receive a refund, separate from any unrelated files or documents, by certified
mail addressed to a current physical address and by electronic mail to a current email address. The notice shall take substantially the same form as the notice
and form for customer signature set out in Exhibit A, incorporated herein by
reference.
d) Respondent GSI will send the letter to the Eligible Purchasers of Alabama within 30 calendar days of the Effective Date, and will send a second letter
approximately 30 calendar days after the first letter is sent.
e) Respondent GSI will allow Eligible Purchasers the option to receive a refund by responding to the letter in writing addressed to a designated physical or
electronic mail address for Respondent GSI.
f) Within seven calendar days from the expiration of the time for all Eligible Purchasers from each participating state to elect a refund and return the
purchased metal (the "Expiration Date"), Respondent GSI shall establish an escrow account ("Account") to be used for the sole purpose of (i) paying
refunds to Eligible Purchasers, and (ii) paying the expenses of the distribution.
g) Within fourteen calendar days of the Expiration Date, Respondent GSI shall either (a) deposit cash into the Account consisting of 110% of the total amount
to be refunded to all Eligible Purchasers (the "Deposit Amount"), or (b) obtain a line of credit for the Deposit Amount.
h) Failure by Respondent GSI to timely make in its entirety the deposit or obtain the line of credit required by subparagraph (g) shall be a material breach by GSI
of this Order, and time is of the essence with respect to GSI's obligation to make the deposit or obtain the line of credit, provided that in the event the Deposit
Amount is more than $1,000,000, then GSI and the Participating States shall attempt in good faith to arrange a method for GSI to finance its obligation to
monetize the value of the precious metals that customers would be required to return pursuant to their refund requests. In the event no such alternative is
agreed upon within 30 days of the Expiration Date, GSI and the Commission may withdraw from this Consent Order.i) Respondent GSI will pay refunds, as calculated herein, to Eligible Purchasers within 90 calendar days after the Expiration Date. GSI shall not pay any
refunds until after it has made the deposit or obtained the line of credit required by subparagraph (g) or an alternative arrangement has been made pursuant to
subparagraph (h).
j) Respondent OSI will provide to the Commission, prior to the execution of this Order, the names, email addresses, and physical addresses of Eligible
Purchasers in Alabama, as well as the date metals were purchased, the purchase price of those metals and the current Liquidation Value of the metals of all
identified Eligible Purchasers within Alabama. GSI shall provide to the Commisson (i) evidence of the establishment and funding of the Account, (ii) the aggregate number of purchasers from all participating states that elected to receive a refund, and (iii) the aggregate amount of the refunds to be paid.
Within 30 days of a request by the Commission, Respondent GSI will provide to the Commission copies of any and all written communications with Eligible
Purchasers in Alabama, a list of Eligible Purchasers who elected to receive a refund, who elected not to receive a refund, who did not respond, and who could
not be reached, and records reflecting the payment of refunds to Eligible Purchasers.
k) Respondents, the Commission, and their respective personnel shall not influence an Eligible Purchaser to either accept or reject an offer of refund under
the terms of this Order, provided that the Commission advising Eligible Purchasers of the forthcoming notice from OSI and the importance of making
an election shall not be considered an effort to influence an Eligible Purchaser within the meaning of this subparagraph.

8. Any GSI customer that GSI was unable to notify ~ay request a refund within six months of the Expiration Date.

9. This Order shall not disqualify or be interpreted to disqualify Respondents from any business they otherwise are qualified, licensed, or permitted to perform under applicable law, nor shall it form the basis of any disqualification under federal, state, or local law. This Order is not intended to subject any Covered Person to any disqualifications under the laws of the United States, any state, the District of Columbia, Puerto Rico, or the U.S. Virgin Islands, or under the rules or regulations of any securities or commodities regulator or self-regulatory organization, including, without limitation, any disqualification from relying upon the state or federal registration exemptions or safe harbor provisions. ("Disqualification Laws"). This Order is not intended to be considered as a disqualifying event according to these Disqualification Laws."Covered Persons" means Respondent GSI and its current or former officers, directors, members, managers, employees, or other persons that could otherwise be disqualified as a result of this Order.
This Order is not intended to serve as a ground(s) for denial of or renewal of any license or registration to Respondents.

10. This Order is not intended to be deemed or used as (a) an admission of, or evidence of, the validity of any alleged wrongdoing or liability; or (b) an admission of, or evidence of, any such alleged fault or omission of Respondents in any civil, criminal, arbitration, or administrative proceeding in any court, administrative agency, or other tribunal.

11. This Order is not intended to state or imply willful, reckless, or fraudulent conduct by Respondents, or their affiliates, directors, officers, employees, associated persons, or agents.

12. Respondents, through execution of this Order, voluntarily waive the right to a hearing, appeal, and judicial review of this Order under the Relevant Laws.

13. If, after this settlement is executed, Respondents fail to comply with any of the terms set forth herein, or any representation by Respondents herein is discovered to be materially incorrect or misleading or if GSI or the Commission withdraws pursuant to paragraph 5(h), the Commission may take any action permitted under state law, including but not limited to reinstituting the actions and investigations referenced in this Consent Order.

14. Respondents enter into this Order voluntarily and represent that no threats, offers, promises, or inducements of any kind have been made by the Participating States or their officers, employees, agent s, or representatives to induce Respondents to enter into this Order.

LINK: https://asc.alabama.gov/Orders/2021/CO-2021-0009.pdf

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As of July 22, 2021

A Cease and Desist Order was issued by the Alabama Securities Commission requiring GSI exchange to cease further offers or sales of any security into, within or from the state of Alabama.

LINK: https://asc.alabama.gov/Orders/2021/CD-2021-0009.pdf

As of October 31, 2023

The California DFPI and GSI Exchange of agreed to the issuance of a Consent Order to resolve allegations of conducting business as an investment
adviser in California without first securing a certificate to do so from the Commissioner.

GSI and Anderson neither admit nor deny the findings of fact and conclusions of law contained in this Order, and they hereby consent to the entry of this Order and the orders herein by the Commissioner.

As part of the resolution of this matter, GSI and Anderson have submitted a comprehensive compliance plan and proposal to California, which is designed to ensure that GSI and Anderson will not provide securities advice in the future, will be transparent in all aspects of their business activities with customers, and will otherwise abide by the CSL and CCL. In determining to issue this Consent Order, California considered GSI’s and Anderson’s agreement to offer rescission and implement the compliance plan, and their provision of substantial and timely cooperation with the Commissioner

As per the Consent Order (Abridged Version):

Orders to Desist and Refrain. Pursuant to Corporations Code section 25532 (b), GSI and Anderson are hereby ordered to desist and refrain from violating Corporations Code sections 25230 to the extent that any violations exist. Pursuant to Corporations Code section 25532 (d), GSI and Anderson are hereby ordered to desist and refrain from engaging in unlawful acts under section 25235 of the CSL to the extent that any violations exist. Pursuant to Corporations Code and 29542,GSI and Anderson are hereby ordered to desist and refrain from engaging in unlawful acts under 29536 of the CCL to the extent that any violations exist.

Order for Ancillary Relief. Pursuant to Corporations Code section 25532 (e), GSI shall make offers of refunds in exchange for the metals purchased to investors who purchased precious metals from GSI before July 22, 2021 and were California residents at the time of their purchase. These refund offers are made as part of a multistate process where participating states that elect to be part of this process will have their residents who purchased prior to July 22, 2021 eligible for the
offer of a refund.

Non-noticed Eligible Purchasers. Any Eligible Purchaser that GSI was unable to notify may request a refund within six months of the Expiration Date.

Full and Final Settlement. The Parties hereby acknowledge and agree that this Consent Order is intended to constitute a full, final, and complete resolution of the matters under investigation, and that no further proceedings or actions will be brought by the Commissioner in connection with these matters except under the CSL, CCL or any other provision of law, excepting therefrom any proceeding to enforce compliance with the terms of this Consent Order.

No Admission of Fault. This Order is not intended to be deemed or used as (a) an admission of, or evidence of, the validity of any alleged wrongdoing or liability; or (b) an admission of, or evidence of, any such alleged fault or omission of Respondents in any civil, criminal, arbitration, or
administrative proceeding in any court, administrative agency, or other tribunal.

No Implication of Fraudulent Conduct. This Order is not intended to state or imply willful, reckless, or fraudulent conduct by Respondents, or their affiliates, directors, officers, employees, associated persons, or agents.

To view the complete Consent Order, use the link below:

LINK: https://dfpi.ca.gov/wp-content/uploads/sites/337/2023/10/Consent-Order-True-Bullion-LLC-dba-Gold-Silver-International-Exchange.pdf