[Federal Register Volume 65, Number 241 (Thursday, December 14, 2000)]
[Notices]
[Pages 78174-78175]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 00-31778]


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FEDERAL TRADE COMMISSION

[File No. 002 3024]


R.S. of Houston Workshop, 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 December 29, 2000.

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

FOR FURTHER INFORMATION CONTACT: Peter Lamberton, FTC/H-238, 600 
Pennsylvania Ave., NW., Washington, DC 20580. (202) 326-3274.

SUPPLEMENTARY INFORMATION: Pursuant to section 6(f) of the Federal 
Trade Commission Act, 38 Stat. 721, 15 U.S.C. 46 and section 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 October 31, 2000), on the World Wide Web, at ``http://www.ftc.gov/
opa/2000/10/topten.htm.'' A paper copy can be obtained from the FTC 
Public Reference Room, Room H-130, 600 Pennsylvania Avenue, NW., 
Washington, DC 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, DC 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 
section 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 R.S. of Houston 
Workshop, a company, and Ronald J. Schoemmell and Valdimar Thorkelsson, 
fifty percent owners and principals of the company, individually and as 
officers of the company (together, ``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 a training program for a trading method on the 
Internet for the daily buying and selling of stocks (also known as 
``day trading''). They advertise on their Internet Web site, 
www.rsofhouston.com. This matter concerns allegedly deceptive 
representations of the earnings and profit potential, as well as the 
extent of risk involved in using respondents' trading programs and 
trading methods.
    The Commissions' proposed complaint alleges that respondents made 
unsubstantiated claims that users of respondents' trading programs and 
trading methods could reasonably expect to earn large profits, as much 
as six figures annually (i.e., more than $182,000); that users of 
respondents'

[[Page 78175]]

trading programs and trading methods could reasonably expect consistent 
investment returns of $2,500 to $3,500 per week; that users of 
respondents' trading programs and trading methods could reasonably 
expect to succeed at day trading for a lifetime of profitable and 
enjoyable trading; and that testimonials appearing in the 
advertisements for respondents' trading programs and trading methods 
reflected the typical or ordinary experience of members of the public 
who use the program. In addition, the complaint alleges that 
respondents misrepresented that users of respondents' trading programs 
and trading methods could trade in volatile markets with LOW RISK.
    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 that users of 
respondents' day trading program can reasonably expect to earn large 
profits: (1) That users of respondents' trading program or trading 
method can reasonably expect to earn large profits, or as much as 
$2,000 to $5,000 per day on some days; (2) that users of respondents' 
trading program or trading method can reasonably expect to earn profits 
of $500 to $750 or more per day; (3) that users of respondents' trading 
program or trading method can reasonably expect to approach trading as 
a business and earn a consistent living from the markets; and (4) that 
users of respondents' trading program or trading method can reasonably 
expect to trade in volatile markets with low risk. Part I also requires 
respondents to possess a reasonable basis substantiating claims about 
the amount of earnings, income, or profit that a prospective user of 
any trading program or trading method could reasonably expect to 
attain, or about any financial benefit or other benefit from the 
purchase or use of any such trading program or trading method.
    Part II of the proposed order 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, ``DAYTRADING 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 trading program. This 
disclosure is in addition to, and not instead of, any other disclosure 
that respondents may be required to make.
    Part IV of the proposed order prohibits respondents from 
representing without a reasonable basis that the experience represented 
by any user, testimonial or endorsement of any trading program 
represents the typical or ordinary experience of members of the public 
who use the program; or respondents must disclose either what the 
generally expected results would be for users of the trading program, 
or the limited applicability of the endorser's experience to what users 
may generally expect to achieve, that is, that users should not expect 
to experience similar results.
    Parts V and VI of the proposed order require respondents to keep 
copies of relevant advertisements and materials substantiating claims 
made in the advertisements and to provide copies of the order to 
certain personnel. Part VII requires R.S. of Houston Workshop to notify 
the Commission of any changes in the corporate structure that might 
affect compliance with the order. Parts VIII and IX require that 
individual respondents Ronald J. Schoemmell and Valdimar Thorkelsson, 
respectively, to notify the Commission of changes in their employment 
status for a period of seven years. Part X requires respondents to file 
compliance reports with the Commission. Part XI 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. 00-31778 Filed 12-13-00; 8:45 am]
BILLING CODE 6750-01-M