SUMMARY OF ENFORCEMENT SECTION'S ALLEGATIONS
The Enforcement Section of the Missouri Securities Division ("Enforcement Section") has alleged that John Adam King II ("King"), offered to enter into, entered into, or confirmed the execution of transactions for the delivery of silver bullion in margin accounts of Missouri residents, in violation of Section 409.803.1, RSMo. (2000).
Respondent King and the Enforcement Section desire to settle the allegations and matters raised by the Enforcement Section relating to the Respondent King's alleged conduct.
CONSENT TO JURISDICTION
Respondent King and the Enforcement Section stipulate and agree that the Commissioner has jurisdiction over the Respondent King and these matters pursuant to Sections 409.800 to 409.863, RSMo. (2000).
Respondent King and the Enforcement Section stipulate and agree that the Commissioner has authority to enter this Order pursuant to Section 409.6-604(h), RSMo. (Cum. Supp. 2009), which provides:
"The commissioner is authorized to issue administrative consent orders in the settlement of any proceeding in the public interest under this act."
WAIVER AND EXCEPTION
Respondent King waives his right to a hearing with respect to this matter.
Respondent King waives any right that he may have to seek judicial review or otherwise challenge or contest the terms and conditions of this Order. Respondent King specifically forever releases and holds harmless the Missouri Office of Secretary of State, Secretary of State, Commissioner of Securities, and their respective representatives and agents from any and all liability and claims arising out of, pertaining to, or relating to this matter.
Respondent King stipulates and agrees with the Enforcement Section that, should the facts contained herein prove to be false or incomplete, the Enforcement Section reserves the right to pursue any and all legal or administrative remedies at its disposal.
CONSENT TO COMMISSIONER'S ORDER
Respondent King and the Enforcement Section stipulate and agree to the issuance of this Consent Order without further proceedings in this matter, agreeing to be fully bound by the terms and conditions specified herein.
Respondent King agrees not to take any action or to make or permit to be made any public statement creating the impression that this Order is without factual basis. Nothing in this paragraph affects Respondent King's (a) testimonial obligations; (b) right to take legal or factual position in defense of litigation or in defense of other legal proceedings in which the Commissioner of Securities is not a party; or (c) right to make public statements that are factual.
Respondent King agrees that Respondent King is not the prevailing party in this action since the parties have reached a good faith settlement.
Respondent King neither admits nor denies the allegations made by the Enforcement Section, but consents to the Commissioner's Findings of Fact, Conclusions of Law, and Order as set forth below solely for the purposes of resolving this proceeding and any proceeding that may be brought to enforce the terms of this Consent Order.
COMMISSIONER'S FINDINGS OF FACT,
CONCLUSIONS OF LAW, AND ORDER
I. FINDINGS OF FACT
Respondent John Adam King II ("King") has never been registered as a securities agent in Missouri and has a last known mailing address in Lake Worth, Florida.
On or about March, 2006, but no later than October 2008, Respondent King was associated with Respondent Global Bullion Exchange, LLC ("Global Bullion").
During the period of March, 2006 through no later than October of 2008, Respondent King solicited public customer's purchase of precious and industrial metals on behalf of Global Bullion and its affiliated entities.
In late 2006, the Enforcement Section alleged Respondent King solicited a 64-year old Moberly, Missouri resident ("MR1") on behalf of Respondent Global Bullion on the market opportunities to invest in silver.
On April 18, 2008, MR1 received a trade confirmation on Global Bullion letterhead indicating that forty-nine thousand dollars ($49,000) had been used to purchase thirteen thousand two hundred (13,200) ounces of silver bullion for MR1's account. MR1 did not authorize the purchase of thirteen thousand two hundred (13,200) ounces of silver bullion on April 18, 2008. As a result of Respondent King's actions, MR1 has lost at least forty-nine thousand dollars ($49,000) in MR1's account.
In October, 2008, the Enforcement Section alleged Respondent King solicited a 41-year old St. Charles, Missouri resident ("MR2") on behalf of the Respondent Global Bullion, on the market opportunities to invest in silver. To date, the subject MR2 has lost over thirteen thousand eight hundred and sixty dollars ($13,860) in MR2's account.
MR1 and MR2 did not receive documentation and were not informed of any terms and conditions detailing any arrangement MR1 and MR2 may have had with Respondent King. Among other things, Respondent King did not disclose to MR1 and MR2 the following:
the terms of the margin account;
the source of the financing to fund the margin account;
the terms of delivery of the silver purchased;
the terms of the storage for the silver purchased;
the risks of investing in commodities; or
the risks of investing on margin.
II. CONCLUSIONS OF LAW
The Commissioner finds Respondent King violated Section 409.803.1, RSMo. (2000), by offering to enter into, entering into, or confirming the execution of, any transaction for the delivery of any commodity under a commodity contract commonly known as a margin account, margin contract, leverage account, leverage contract, or under any contract, account, arrangement, scheme, or device that serves the same function or functions or is marketed or managed in substantially the same manner as such account or contract;
The Commissioner finds Respondent King violated Section 409.803.2, RSMo. (2000), by selling or purchasing, or offering to sell or purchase, any commodity under any commodity contract or under any commodity option or offer to enter into or enter into as seller or purchaser any other commodity contract or any commodity option;
The Commissioner finds Respondent King violated Section 409.810, RSMo. (2000), by directly or indirectly cheating or defrauding, or employing any device, scheme or artifice to cheat or defraud, any person, by making an untrue statement of material fact, or engaging in any transaction, act, practice or course of business which would operate as a fraud or deceit of any other person.
The Commissioner, after consideration of the stipulations set forth above and on the consent of Respondent King and the Enforcement Section, finds and concludes that the Commissioner has jurisdiction over Respondent King and this matter and that the following Order is in the public interest, necessary for the protection of public investors and consistent with the purposes intended by Chapter 409, RSMo. (Cum. Supp. 2009).
NOW, THEREFORE, it is hereby Ordered that:
Respondent King, shall not engage in any act or practice constituting a violation of any provision of sections 409.800 to 409.863, RSMo. (2000), or any rule or order promulgated or issued under sections 409.800 to 409.863, RSMo. (2000);
Respondent King shall pay to the Missouri Secretary of State's Investor Education and Protection Fund the sum of five thousand dollars ($5,000.00). Respondent King shall pay one thousand dollars ($1,000) within ten (10) days following the execution of this consent; and Respondent King shall then make four (4) equal monthly installments of one thousand dollars ($1,000) each. The first installment will be due on April 1, 2012, and all other installments will be due on the first day of each month, with the last installment due on July 1, 2012. Should Respondent King fail to make any payment, as described above, the entire principal sum then remaining will be immediately due and payable without notice or demand;
These payments shall be sent to the Securities Division at 600 W. Main Street, Jefferson City, Missouri 65101, and shall be payable to the Missouri Secretary of State's Investor Education and Protection Fund. The Division will send the money to the Missouri Secretary of State's Investor Education and Protection Fund; and
Respondent King shall pay his own costs and attorneys' fees with respect to this matter.
WITNESS MY HAND AND OFFICIAL SEAL OF MY OFFICE AT JEFFERSON CITY, MISSOURI THIS 5TH DAY OF MARCH, 2012.
SECRETARY OF STATE
MATTHEW D. KITZI
COMMISSIONER OF SECURITIES
Consented to by:
MISSOURI SECURITIES DIVISION
Kristine Sonnett Kauflin, MO Bar No. 57377
Chief Enforcement Counsel
RESPONDENT JOHN ADAM KING II
John Adam King II
Approved as to Form:
Lance Y. Kinzer
Attorney for Respondent King