[Federal Register Volume 65, Number 89 (Monday, May 8, 2000)]
[Notices]
[Pages 26613-26614]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-11458]


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FEDERAL TRADE COMMISSION.

[File No. 0023113]


Michael G. Chrisman, et al.; Analysis to Aid Public Comment

AGENCY: Federal Trade Commission.

ACTION: Proposed Consent Agreement.

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SUMMARY: The consent agreement in this matter settles alleged 
violations of federal law prohibiting unfair or deceptive acts or 
practices or unfair methods of competition. The attached Analysis to 
Aid Public Comment describes both the allegations in the draft 
complaint that accompanies the consent agreement and the terms of the 
consent order--embodied in the consent agreement--that would settle 
these allegations.

DATES: Comments must be received on or before May 30, 2000.

ADDRESSES: Comments should be directed to: FTC/Office of the Secretary, 
Room 159, 600 Pennsylvania Ave., NW, Washington, D.C. 20580.

FOR FURTHER INFORMATION CONTACT: Stephen Gurwitz or Michael Ostheimer, 
FTC/H-238, 600 Pennsylvania Ave., NW, Washington, D.C. 20580, (202) 
326-3272 or 326-2699.

SUPPLEMENTARY INFORMATION: Pursuant to Section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and Sec. 2.34 of the 
Commission's Rules of Practice (16 CFR 2.34), notice is hereby given 
that the above-captioned consent agreement containing a consent order 
to cease and desist, having been filed with and accepted, subject to 
final approval, by the Commission, has been placed on the public record 
for a period of thirty (30) days. The following Analysis to Aid Public 
Comment describes the terms of the consent agreement, and the 
allegations in the complaint. An electronic copy of the full text of 
the consent agreement package can be obtained from the FTC Home Page 
(for May 1, 2000), on the World Wide Web, at ``http://www.ftc.gov/ftc/
formal.htm.'' A paper copy can be obtained from the FTC Public 
Reference Room, Room H-130, 600 Pennsylvania Ave., NW, Washington, D.C. 
20580, either in person or by calling (202) 326-3627.
    Public comment is invited. Comments should be directed to: FTC/
Office of the Secretary, Room 159, 600 Pennsylvania Ave., NW, 
Washington, D.C. 20580. Two paper copies of each comment should be 
filed, and should be accompanied, if possible, by a 3\1/2\ inch 
diskette containing an electronic copy of the comment. Such comments or 
views will be considered by the Commission and will be available for 
inspection and copying at its principal office in accordance with 
Sec. 4.9(b)(6)(ii) of the Commission's Rules of Practice (16 CFR 
4.9(b)(6)(ii)).

Analysis of Proposed Consent Order to Aid Public Comment

    The Federal Trade Commission has accepted, subject to final 
approval, an agreement containing a consent order from Michael G. 
Chrisman and Michelle R. Chrisman, individually and doing business as 
DayTrading International (``respondents'').
    The proposed consent order has been placed on the public record for 
thirty (30) days for receipt of comments by interested persons. 
Comments received during this period will become part of the public 
record. After thirty (30) days, the Commission will again review the 
agreement and the comments received, and will decide whether it should 
withdraw from the agreement or make final the agreement's proposed 
order.
    Respondents sell and distribute recommendations for trading stock. 
Their trading products or services include the ``Live Interactive 
Trading Room,'' the ``Daily Picks Newsletter,'' and the ``Hot Small 
Caps Newsletter.'' The ``Live Interactive Trading Room'' is

[[Page 26614]]

an Internet chat room where respondents provide ``live'' day trading 
advice during the day on when to buy and sell stocks. The ``Daily Picks 
Newsletter,'' and the ``Hot Small Caps Newsletter'' are in the form of 
e-mails delivered once per day which contain advice for stock trading. 
Respondents advertise on their Internet Web site, 
www.daytradingintl.com. This matter concerns allegedly deceptive 
representations of the earnings and profit potential, as well as the 
extent of risk involved in using respondents' stock trading program.
    The Commission's proposed complaint alleges that respondents made 
unsubstantiated claims that users of respondents' ``Live Interactive 
Trading Room'' program can reasonably expect to achieve profits on 
their trades more than 85 percent of the time and achieve substantial 
profits on a consistent basis (e.g., $500 per trade, two or three times 
each day); and that users of respondents' ``Daily Picks Newsletter'' 
program can reasonably expect to make short term trades, held one to 
five days, that achieve a rate of return of between two percent and ten 
percent per trade.
    In addition, the complaint alleges that respondents misrepresented 
that users of their trading programs can reasonably expect to trade 
stocks profitably with little or no risk. The complaint also alleges 
that respondents misrepresented that since January 1996, their ``Daily 
Picks Newsletter'' program has returned an average of 167 percent 
annually and that during 1996 and 1997, their ``Hot Small Caps 
Newsletter'' program returned an average annual return of 214 percent. 
The complaint explains that respondents did not begin to offer the 
``Daily Picks Newsletter'' or ``Hot Small Caps Newsletter'' until 1998.
    The proposed consent order contains provisions designed to prevent 
respondents from engaging in similar acts and practices in the future.
    Part I of the proposed order requires respondents to have a 
reasonable basis substantiating any representation about the 
percentage, ratio, or number of trades that a user of any trading 
program could reasonably expect to be profitable; the amount of 
earnings, income, or profit that a user of any trading program could 
reasonably expect to attain; the rate of return that a user of any 
trading program could reasonably expect to attain or the length of time 
over which such a rate of return could reasonably be expected; or the 
past performance of a trading program. Part I also requires respondents 
to possess a reasonable basis substantiating claims about any financial 
benefit or other benefit from any trading program.
    Part II of the proposed order prohibits respondents from 
misrepresenting that since January 1996, respondents' ``Daily Picks 
Newsletter'' program has returned an average of 167 percent annually or 
that during 1996 and 1997, respondents' ``Hot Small Caps Newsletter'' 
program returned an average annual return of 214 percent. It also 
prohibits respondents from misrepresenting that users of any trading 
program can reasonably expect to trade with little or no financial risk 
and from misrepresenting the extent of risk to which users of any such 
program are exposed.
    Part III of the proposed order requires respondents to disclose, 
clearly and conspicuously, ``DAY TRADING involves high risks and YOU 
can LOSE a lot of money,'' in close proximity to any representation 
they make about the financial benefits of any day trading program. This 
disclosure is in addition to, and not instead of, any other disclosure 
that respondents may be required to make.
    Parts IV-VII of the proposed order require respondents to keep 
copies of relevant advertisements and materials substantiating claims 
made in the advertisements; to provide copies of the order to certain 
personnel; to notify the Commission of changes in their employment 
status and any changes in the name of their business for a period of 
ten years; and to file compliance reports with the Commission. Part 
VIII provides that the order will terminate after twenty (20) years 
under certain circumstances.
    The purpose of this analysis is to facilitate public comment on the 
proposed order. It is not intended to constitute an official 
interpretation of the agreement and proposed order or to modify in any 
way their terms.

    By direction of the Commission.
Donald S. Clark,
Secretary.
[FR Doc. 00-11458 Filed 5-5-00; 8:45 am]
BILLING CODE 6750-01-M