The United States Commodity Futures Trading Commission (CFTC) is displeased with the lack of response by First State Depository Company, LLC and Argent Asset Group LLC to its requests for information in precious metals fraud investigation.

On May 5, 2021, the CFTC filed a set of documents with the District Court for the District of Columbia. The regulator requests that the Court issue an order requiring Respondents First State and Argent to show cause why the Court should not compel them to comply with administrative subpoenas issued to them in 2019 and 2020.

First State, a Delaware business entity, is a “private depository” that offers “a full range of specialized certified coin and precious metals custody, shipping and accounting services to both commercial and individual participants in the rare coin and precious metals markets.”

Argent is a Delaware business entity with its principal place of business at the same address as First State in Wilmington. Argent engages in the business of buying, selling, and leasing coins, bullion, bars, and other precious metals, and touts itself as a “leading numismatic and precious metals trading firm.”

The CFTC issued subpoenas to the respondent firms in 2019 and 2020 in connection with an investigation into whether Argent, First State, or other individuals or entities engaged in fraudulent or manipulative conduct in connection with the purchase or sale of precious metals, in violation of the Commodity Exchange Act, 7 U.S.C. §§ 1–26 (2018) and the Commission Regulations, 17 C.F.R. § 1.1–190.

In 2019 and 2020, the CFTC obtained information indicating that a third party not before the Court in this matter may have engaged in fraudulent or manipulative conduct involving precious metals purchased, sold, or leased to Argent, or held on deposit at First State. Accordingly, on behalf of the Commission, the Division initiated an investigation from its Washington, DC headquarters to discern whether the third party or others had violated or were violating the Act and Regulations by, among other things, engaging in fraudulent or manipulative conduct involving precious metals.

During the course of that investigation, the Division of Enforcement obtained information indicating that Argent and First State may themselves have engaged in fraudulent or manipulative conduct involving precious metals that they held on deposit or purchased, sold, or leased.

The CFTC Division of Enforcement has spent close to a year and a half attempting to get Respondents to respond to the Subpoenas. Although Respondents eventually produced a number of documents in response to the subpoenas dated November 19, 2019, and January 14, 2020, they have not produced any documents in response to the July 2020 Subpoenas, and even their production in response to the First Set of Subpoenas was insufficient.

The regulator says that the respondents have failed to comply with the Subpoenas despite ample notice, multiple grants of extensions, and notice of a potential enforcement action. Respondents have provided no explanation for why they have not complied in full or why responsive documents cannot be produced.

Accordingly, the Commission seeks an order from the Court requiring Respondents to show cause why they should not be compelled to comply fully with the Subpoenas and, if necessary, an order requiring Respondents to comply fully with the Subpoenas.