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Microcap & Penny Stocks : Zia Sun(zsun) -- Ignore unavailable to you. Want to Upgrade?

To: StockDung who wrote (7657)	5/2/2000 1:00:00 AM
From: Sir Auric Goldfinger	Read Replies (4) \| Respond to of 10354

Federal Agencies Settle 14 Suits Over False Day-Trading Claims By GLENN R. SIMPSON and MICHAEL SCHROEDER Staff Reporters of THE WALL STREET JOURNAL WASHINGTON -- Federal regulators are cracking down on day-trading operations that promise quick gains with little risk. Without admitting any wrongdoing, 14 firms or individuals agreed in settlements with the Federal Trade Commission, Securities and Exchange Commission and Commodity Futures Trading Commission to stop making such claims. Using a 1999 study by state securities regulators which found that, on average, 70% of day traders lose money, the agencies targeted firms that sell investment advice or online trading services by describing the field as highly profitable even to the inexperienced. The crackdown is the latest in a series of sweeps conducted by regulators aiming to clamp down on fraudulent Internet investment activities, including stock issuers and promoters. The FTC brought three cases, the CFTC 10 and the SEC one. In addition to cease and desist agreements, the CFTC imposed $10,000 fines on each settlement party. The CFTC's heightened role reflects an apparent trend in online day-trading shops away from "momentum investing" in technology issues and into more complex speculative methods such as futures contracts. Ellery Coleman of Warner Robins, Ga., whose Granite Investments operates a Web site called Choice Day Trades, signed consent agreements with the CFTC and the FTC. The agreements concerned claims he made about his software programs for trading Standard & Poor's 500 futures contracts. He touted "highly effective day trading based on a very powerful methodology which has worked for decades," and "day trading systems that consistently identify winning day trades in the stock market," according to FTC documents. "They thought that we weren't sufficiently disclosing the risk involved in day trading," Mr. Coleman said. "It was on our Web site, but it was not on every page," he said. But he also said the high risks of such trading are already well known. "Everybody that goes into this knows that." In a federal court complaint, the government alleged Mr. Coleman's enthusiastic ad testimonials "do not reflect the actual experiences of consumers who have used the programs," and that he "does not personally use his S&P futures trading programs to trade on his own behalf." He didn't admit to either claim. Mr. Coleman said he plans to stay in business. But visitors to his Web site are now greeted with a question: "Can You Handle The Risk?" A long warning below concludes, "FUTURES AND STOCK TRADING involves high risks and YOU can LOSE a lot of money." The changes were ordered by the CFTC and the FTC. The CFTC said a growing number of promoters are using the Internet to claim they have earned enormous profits from commodity-trading systems. These typically are computerized programs that signal investors when to buy and sell futures and options contracts based on technical analysis of market trends. Regulators charge the claimed results were false and often based on hypothetical or simulated trading -- not actual trading in futures and options markets. In promotions for "Insiders Report," Michael P. Calo said his newsletter is the "most successful and profitable day and short-term trading system you can find." Mr. Calo was one of the parties in the group that settled complaints with regulators. On his Web site and on investment message boards, he claimed returns of 300% or more, which the CFTC said were based on purely hypothetical trading. The agency said Mr. Calo didn't have a trading system and failed to disclose the hypothetical nature of trading gains to subscribers who paid $1,000 a year for his newsletter. Mr. Calo isn't represented by an attorney and he couldn't be reached for comment. The SEC settled an administrative fraud case against Robert Garganese of Las Vegas and his company Genesis Trading for alleged false and misleading advertising to solicit day traders to subscribe to his Internet stock-picking service. He didn't admit or deny wrongdoing. The case is the third in recent months in which the SEC has alleged fraud by operators of Internet stock-picking services. Regulators alleged that Mr. Garganese used his Web site to fraudulently promote Genesis Trading as "a company composed of professional traders" with a unique system to track institutional buying and selling. In fact, Mr. Garganese isn't a professional trader and was the only person running the Web site, the SEC said. In addition, the SEC alleged that the Genesis stock picks were generated from off-the-shelf software unrelated specifically to tracking institutional trading. Mr. Garganese ran the Web site from August 1998 until October 1999, when he began serving a one-year federal prison term for money laundering and telemarketing fraud charges unrelated to this action. His attorney, David Chesnoff, said that Mr. Garganese "didn't have an intent to violate SEC rules. He was not as knowledgeable as he should have been" about disclosure requirements.