Originally created 05/02/00

Regulators take steps to halt profit claims



WASHINGTON -- Federal regulators said today that 14 online trading firms or individuals have agreed to stop claims that the trading strategies and systems they sell can make investors easy money with little risk.

The Federal Trade Commission, the Commodity Futures Trading Commission and the Securities and Exchange Commission announced settlements with the firms in which they agreed to drop unsubstantiated claims of profits.

The federal agencies also warned consumers to be wary of false and misleading claims on Web sites touting trading strategies or systems.

The firms neither admitted to nor denied wrongdoing in the settlements with the three agencies.

The 11 firms and individuals cited by the Commodity Futures Trading Commission for alleged fraudulent promotion of computerized trading systems and advisory services for commodities also agreed to pay civil fines of $10,000 each. The fines will be waived if a firm can demonstrate it is unable to pay.

The three firms named by the Federal Trade Commission provide strategies for day trading, in which investors make bets on the tiniest rises and dips of the stock markets, squeezing profits by rapidly buying and selling shares electronically.

The online firms -- CompuTrade LLC, Granite Investments (also named by the CFTC) and Day Trading International of Kirksville, Mo. -- sold combinations of "real time" training, computer software programs, trading manuals, e-mail newsletters and mentoring services at prices from $79 to $4,995, the FTC said.

They made advertising claims such as "... Make money regardless of the market going up or down" and returns on investments of 2,041 percent, the agency said.

The Securities and Exchange Commission announced a settlement of civil fraud charges against Robert Garganese and his online company, Genesis Trading, for allegedly using false and misleading advertising to lure day traders to his stock-picking service. Garganese is serving a one-year prison term for money laundering and telemarketing fraud, the SEC said.

Garganese and the company, without admitting or denying wrongdoing, agreed to refrain from future violations of securities laws and to publicize the SEC's order to current and potential customers for a year.

The 11 firms and individuals cited by the CFTC are Oasis Publishing Corp., Mohammed Najib Taybi, John B. Reily, Paul Judd International Corp., First Financial Trading, Christopher Fernwick, R.S. of Houston Workshop, New Age Trading Techniques, Global Futures Exchange & Trading Co., Trendy Systems LLC and Granite Investments.

On the Net:

Federal Trade Commission Web page on day trading: www.ftc.govbcpconline/edcam/daytrade.

Securities and Exchange Commission page: www.sec.gov/consumer/daytips.htm.