Securities — precious metals

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United States Court of Appeals For the Seventh Circuit

Civil

Securities — precious metals

Dealers in precious metals are not financial institutions subject to the Right to Financial Privacy Act.

“The nature of appellants’ businesses is readily distinguishable from that of the other entities listed in the RFPA’s definition of “financial institution” and the similarities proffered by appellants are both chimerical and unavailing. Worth and Mintco provide financing primarily, if not solely, for the very narrow purpose of enabling or facilitating their customers’ purchases of the goods they sell, to wit, precious metals. No evidence has been adduced that indicates that individuals who receive credit from Worth or Mintco also obtain cash loans or that they receive financing in amounts beyond the amount needed to bridge the gap between their down payments and the purchase prices of the precious metals which they are buying. In this way, the provision of financing is not a defining characteristic of appellants’ business; rather, it is merely a means to an end, the real or primary goal of the transaction being a sale of precious metals. Clearly, Worth and Mintco are sellers, not financial institutions. This is, in fact, how they identify themselves—as a wholesaler and retailer of precious metals, respectively. Moreover, although appellants claim to be “consumer finance institutions,” the loan contract which they use for their financing transactions explicitly provides that any financing that a borrower obtains through Worth’s financing program is not to be used ‘for any personal, family, household or other consumer purposes.’ Given these facts, it is clear that neither Worth nor Mintco qualifies as a “consumer finance institution,” and thus they are not “financial institutions” under the RFPA.”

Affirmed.

12-3372 CFTC v. Worth Bullion Group, Inc.

Appeal from the United States District Court for the Northern District of Illinois, Nordberg, J., Barker, J.