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Investment professionals and participation in online forums

Discussion in 'Professional Trading' started by nursebee, Aug 30, 2022.

Sprout
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nursebee said:
I participate in a non ET forum dedicated to a single company, comprised of many fans as investors and product users. I keep some skepticism over what I read and over participants, suspect in the past that I've been subject to pump and dump pitches in at least one stock.

A user on the other forum began an interesting conversation about options, advocated the purchase of call options. Some of what this person wrote made sense, some was above my head. I took an approach of wanting to better understand the specific rationale at that time, so that if I purchased any call options I'd be able to sleep through any volatility. The poster was unable to sufficiently articulate to me the specific reasons. The poster told me that if I waited until I understood, the time would pass. I was suspicious of this pressure.

This poster engaged in some dialogue with me directly. This dialogue started vie private messaging on the other forum, then to twitter, then via a new name on twitter, then the user asked for the conversation to move to facebook. I was suspicious of this also.

The poster layed out a specific trading plan, seemed to show account movement in the millions. The plan was to sell at a well defined event in the future, publicly stated. Many users of the other forum were not as skeptical as I and the person had some fans, though equally anonymous on the internet. The poster ended up saying they sold all their positions early, weeks or months before the previously stated plan. I was suspicious of this, struck me as some front running, taking advantage of the fervor they stirred up.

I then changed from trying to learn, to full on skepticism and negativity of the poster. The poster blocked me from seeing them on twitter. I did learn of their real name. The poster then stopped participating in the other forum to not be seen there again.

I all but forgot about them until this morning. There is an hour long youtube video up with them being interviewed. The person in question is a Chartered Financial Analyst (CFA) with many years experience as an options trader in Chicago.

So, my questions for you all here, what rules of engagement are there for licensed financial professionals to participate in online discussion, even anonymously? Was this person legally or ethically wrong in what they did and do I have any obligation to report them to regulating agencies?

Previous twitter had no disclosures, they are there now. Previous did not identify as an industry professional, now it does.

What do you think of this situation? Am I off base with my skepticism?
More...

Have you dug up any dirt when doing DD on a review site?

When I was interested in small cap growth stocks, I was on the seekingalpha site quite a bit.

The behavior you describe was similar from a gent there that engaged me and in retrospect I see it as a form of grooming.

He offered himself as a mentor and had my trust. However when I began to ask questions over a couple of months working with him to understand the method better, he demurred and started to act in ways that were obvious red flags. I did deeper DD and discovered that he had a number of complaints against him. He had a Jag shop and took in classics on consignment. After he sold the cars, the owners never got the money. I think he blew out his trading account with options and was struggling to stay above water. His shop shuttered and he stiffed his employees as well.

Trust yourself, most likely you dodged a bullet.

#11 Aug 30, 2022

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Sprout
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ETJ said:
An oldy but a goodie - Wade even pissed off the FTC.

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF WASHINGTON
AT SEATTLE

FEDERAL TRADE COMMISSION, Plaintiff,
v.

WADE COOK FINANCIAL CORP., and WADE COOK SEMINARS, INC., Defendants.

Case No.

COMPLAINT FOR PERMANENT INJUNCTION AND OTHER EQUITABLE RELIEF

Plaintiff, the Federal Trade Commission ("Commission"), for its Complaint alleges the following:

1. The Commission brings this action under Section 13(b) of the Federal Trade Commission Act ("FTC Act"), 15 U.S.C. � 53(b) to obtain temporary, preliminary and permanent injunctive relief, rescission, restitution, disgorgement and other equitable relief to redress purchasers of defendants' wealth building seminars for the injury resulting from defendants' deceptive acts or practices in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).

JURISDICTION AND VENUE

2. This Court has subject matter jurisdiction over plaintiff's claim pursuant to 28 U.S.C. �� 1331, 1337(a) and 1345, and 15 U.S.C. �� 45 (a) and 53(b).

3. Venue in the Western District of Washington is proper under 28 U.S.C. � 1391(b) and (c) and 15 U.S.C. � 53(b).

THE PARTIES

4. Plaintiff, the Federal Trade Commission, is an independent agency of the United States Government created by statute. 15 U.S.C. �� 41 - 58. The Commission enforces Section 5(a) of the FTC Act, 15 U.S.C. � 45(a), which prohibits unfair or deceptive acts or practices in or affecting commerce. The Commission may initiate federal district court proceedings to enjoin violations of the FTC Act, and to secure such equitable relief as may be appropriate in each case, including consumer restitution and disgorgement. 15 U.S.C. � 53(b).

5. Defendant Wade Cook Financial Corporation ("WCFC") is a Nevada corporation with its office and principal place of business at 14675 Interurban Avenue South, Seattle, Washington, 98168-4664. WCFC transacts business in the Western District of Washington.

6. Defendant Wade Cook Seminars Inc. ("WCSI"), is a Nevada corporation with its office and principal place of business at 14675 Interurban Avenue South, Seattle, Washington, 98168-4664. WCSI transacts business in the Western District of Washington.

COMMERCE

7. At all times relevant to this complaint, defendants have maintained a substantial course of trade in or affecting commerce, as "commerce" is defined in Section 4 of the FTC Act, 15 U.S.C. � 44.

DEFENDANTS' COURSE OF CONDUCT

8. Since 1994, defendants have attracted thousands of consumers to their programs by representing in advertisements and other promotional materials that consumers who attend defendants' Wall Street Workshop seminar will learn how to become wealthy trading stocks using the techniques taught at the workshop. The fee for the Wall Street Workshop is between $3,000 and $5,000 depending on the discount and promotion in effect at the time the customer pays to attend the seminar.

9. Typical representations by defendants that they have become wealthy trading in the stock market using the trading formulas taught at the Wall Street Workshop include, but are not limited to, the following:

a. What is our rate of return? I mean, sometimes I don't even want to write these things down because they get so phenomenal. We're talking like 80, 90 percent return, an annualized return of close to 1,000 percent on an annualized basis. And again, if you're not making this kind of money, you need to come along with me and figure out the covered call formula.
b.[F]or every 13 to 14 of these options that we make money on, we lose money on one. . . . Annualized returns: 3,848% and 2,028% . . . if you are not getting these returns, call the number you see on the screen right away.
c. My investment team (Team Wall Street) was earning greater than 300%, often several thousand percent per annum. . . . [We] are an investment instruction team who, as far as I know, net greater returns in the stock market than any other investment group in the country.
10. Typical representations that average consumers who attend the Wall Street Work Shop will make large amounts of money or large returns on their stock market investments by learning and using the trading formulas taught there include, but are not limited to, the following:

a. Our Wall Street Workshop has taught thousands of people how to generate income and win big on Wall Street . . . Our processes are truly what they DO NOT teach at Harvard Business School. They are delivered in such simple and easy-to-understand ways that even teenagers are using them to earn in excess of 20% per month.
b. One of the greatest concerns that I have as an educator is to help people learn how to make money consistently - steady income. Taking $10,000 and learning how to use that money to generate $2,000 or $3,000 of monthly income. Yes I said monthly income.
c. And along comes Wade Cook who says, no, we're going to teach strategies. We're going to teach formulas. We're going to teach a system, a method, a way of consistently and predictably making money.
d. You see, most of my strategies are designed to not lose money. I just hate losing money. . . . Do you? So if you don't like losing money - if you like making lots of money, then come with me as I go through this, but you've got to learn the rules. You've got to learn the formulas or the strategy.
11. Defendants have grossly exaggerated their success trading in the stock market. Defendants have not earned the extremely high rates of return in the stock market that they have claimed in promotional materials. Likewise, defendants have exaggerated the ease with which consumers will be able to earn extremely high rates of return trading in stocks after attending the Wall Street Workshop.

DEFENDANTS' VIOLATIONS OF THE FTC ACT

12. Section 5(a) of the FTC Act prohibits deceptive acts or practices in or affecting commerce.

COUNT I

13. Paragraphs 8 through 11 are incorporated by reference.

14. Defendants have represented, expressly or by implication, that Cook has become wealthy trading or investing in the stock market using the Wade Cook trading formulas that are taught at the Wall Street Workshop.

15. In truth and in fact, Cook has not become wealthy trading or investing in the stock market using the Wade Cook trading formulas that are taught, but from selling seminars and products about trading or investing in the stock market.

16. Therefore, defendants' representation as set forth in Paragraph 14 above is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).

COUNT II

17. Paragraphs 8 through 11 are incorporated by reference.

18. Defendants have represented, expressly or by implication, that consumers who attend the Wall Street Workshop will earn extremely high rates of return, for example, returns of 20% or more per month, on their stock market investments by learning and using the Wade Cook trading formulas.

19. In truth and in fact, in many instances, consumers who attend the Wall Street Workshop do not earn extremely high rates of return, for example returns of 20% or more per month, on their stock market investments by learning and using the Wade Cook trading formulas.

20. Therefore, defendants' representation as set forth in Paragraph 18 above is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).

COUNT III

21. Paragraphs 8 through 11 are incorporated by reference.

22. In connection with the representations set forth in Paragraphs 14 and 18, defendants have failed to disclose the actual rates of return earned by defendants and Cook on all stock-related investments.

23. These facts would be material to consumers in their decision to pay the fee to attend the Wall Street Workshop.

24. In light of the representations described in Paragraphs 14 and 18, defendants failure to disclose the actual rates of return earned by defendants and Cook on all stock-related investments, is a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).

COUNT IV

25. Paragraphs 8 through 11 are incorporated by reference.

26. By disseminating promotional materials and advertisements, and conducting Financial Clinics that contain testimonials from the clinic speakers and from former Wall Street Workshop attendees, defendants have represented, expressly or by implication, that the testimonials reflect the typical or ordinary experiences of members of the public who attend the Wall Street Workshop.

27. In truth and in fact, the testimonials from clinic speakers and former Wall Street Workshop attendees do not reflect the typical or ordinary experiences of members of the public who attend the Wall Street Workshop.

28. Therefore, defendants' representation as set forth in Paragraph 26 above is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).

COUNT V

29. By disseminating promotional materials and advertisements and conducting Financial Clinics in which they make the representations set forth in Counts I, II, and IV defendants have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated such representations, at the time the representations were made.

30. In truth and in fact, defendants did not possess and rely upon a reasonable basis that substantiated such representations, at the time the representations were made.

31. Therefore, defendants' representation as set forth in Paragraph 29 above is false and misleading and constitutes a deceptive act or practice in violation of Section 5(a) of the FTC Act, 15 U.S.C. � 45(a).

INJURY

32. Defendants' violations of Section 5 of the FTC Act, as set forth above, have caused and continue to cause substantial injury to consumers. Absent injunctive relief by this Court, defendants are likely to continue to injure consumers.

THIS COURT'S POWER TO GRANT RELIEF

33. Section 13(b) of the FTC Act, 15 U.S.C. � 53(b), empowers this Court to issue a permanent injunction against defendants' violations of the FTC Act, and, in the exercise of its equitable jurisdiction, to order such ancillary relief as preliminary injunction, rescission, restitution, disgorgement of profits resulting from defendants' unlawful acts or practices, and other remedial measures.

PRAYER FOR RELIEF

WHEREFORE the Commission respectfully requests that this Court, as authorized by 15 U.S.C. � 53(b) and pursuant to its own equitable powers:

(1) Permanently enjoin defendants from violating Section 5(a) of the FTC Act;
(2) Award all such relief as the Court finds necessary to remedy the defendants' violations of Section 5(a) of the FTC Act, including but not limited to rescission of contracts, the refund of monies paid and disgorgement; and
(3) Award the Commission the costs of bringing this action, as well as any other equitable relief that the Court may determine to be proper and just.
DATED: ___________, 2000.

Respectfully submitted,

________________________
Eleanor Durham
ATTORNEY FOR PLAINTIFF
FEDERAL TRADE COMMISSION
More...

Lol, there’s a blast from the past. Good ole Wade Cook!

#12 Aug 30, 2022

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ETJ
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If any of the regulators want to get they'll work an angel. In my experience it can be anything - so most of the real thieves steer clear. The SSAs can take years. If you are really innocent then you have little to fear.

#13 Aug 30, 2022

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TheDawn
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nursebee said:
I all but forgot about them until this morning. There is an hour long youtube video up with them being interviewed. The person in question is a Chartered Financial Analyst (CFA) with many years experience as an options trader in Chicago.
More...

First of all, the "Chartered Financial Analyst (CFA)" is not a profession nor a title. It is a servicemark licensed by AIMR now the CFA Institute. It can only be used as an adjective and never a noun. There is no such thing as a "Chartered Financial Analyst". He/she can only be a Chartered Financial Analyst designation holder or he/she has a Chartered Financial Analyst designation if he/she meets all of the requirements to hold that designation.

nursebee said:
So, my questions for you all here, what rules of engagement are there for licensed financial professionals to participate in online discussion, even anonymously? Was this person legally or ethically wrong in what they did and do I have any obligation to report them to regulating agencies?

Previous twitter had no disclosures, they are there now. Previous did not identify as an industry professional, now it does.

What do you think of this situation? Am I off base with my skepticism?
More...

There are no rules of engagement for any licensed or unlicensed "financial professionals" to participate in any online discussion regardless of whether they are anonymous or not. An Internet forum is a public place same as any physical public place such as a public square or any public meeting place except it's a virtual one. Anybody can make any comments or claims about anything that they like. It's up to you to decide whether to listen to them or believe in them and take action according to what they are advocating or not. As long as they are not making any coercion or any threat of violence to you or your family for you to engage in what they advocate, they are free to say and act however they want. The same behaviour that you exhibit when you see someone standing on a pedestal shouting into a loudspeaker "Repent! Repent!! The end is near!! Embrace Jesus!! Let him into your heart and join our church!!" in a public square is the same behaviour that you exhibit when reading about someone touting about an investment or investment method or whatever in an internet forum. If you don't see anybody going up to those shouting about joining their church and arresting them then there is no rules of engagement in a public internet forum either about some investment or investment strategies.

With internet forums being in existence for thirty years now, I thought this should be common knowledge already...

Last edited: Aug 30, 2022

#14 Aug 30, 2022

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TheDawn
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M.W. said:
CFA is not a license, it is a charter/certificate.
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It's a designation and it's a servicemark so it should NEVER be used as a noun but an adjective. Someone is NEVER a CFA but a CFA designation holder or a CFA charter holder or a CFA candidate or he/she is working on obtaining the CFA designation or he/she belongs to this CFA society...

M.W. said:
Based on that alone the user can engage in anonymous forums as much as he wants as long as he does not violate his pledge to uphold his fiduciary duty and does not violate any laws or regulations.
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Or use the CFA designation as a noun and make himself out to be a "Chartered Financial Analyst (CFA)". If he does, then he's in violation of the code of ethics and one can complain to AIMR now the CFA Institute to get his designation revoked.

#15 Aug 30, 2022

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M.W.
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Sure, if you buy into the woke mantra of the organization that desperately tries to remain relevant. But yes, according to their brainwash you are absolutely correct, I stand corrected.

TheDawn said:
It's a designation and it's a servicemark so it should NEVER be used as a noun but an adjective. Someone is NEVER a CFA but a CFA designation holder or a CFA charter holder or a CFA candidate or he/she is working on obtaining the CFA designation or he/she belongs to this CFA society...

Or use the CFA designation as a noun and make himself out to be a "Chartered Financial Analyst (CFA)".
More...

#16 Aug 30, 2022

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ktm
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ETJ said:
Cramer is neither an employee of a brokerage house, bank, or advisor. Merely a broadcaster. When he starts soliciting funds to manage it will change the equation, but he won't. You can read the rules on any of the regulators - both state and federal sites.
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If I remember correctly he was convicted of wire fraud or something similar back in the 90s? I thought he was banned from managing money for others as part of his deal. I could be wrong about all of this... thought I read it somewhere a while back. I agree Cramer isn't doing anything illegal, but the morality is another matter. He could easily be yelling to "back the truck up" on some POS that he's dumping into at the same moment. He just reeks of being a bucket shop guy.

#17 Aug 30, 2022

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TheDawn
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M.W. said:
Sure, if you buy into the woke mantra of the organization that desperately tries to remain relevant. But yes, according to their brainwash you are absolutely correct, I stand corrected.
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It's the very first section of the Ethics and Professional Standards.

#18 Aug 30, 2022

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ETJ
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One of dozens
- E messinging.pdf
  
  File size:
  
  238.1 KB
  
  Views:
  
  14
#19 Aug 30, 2022

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ETJ
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"If I remember correctly he was convicted of wire fraud or something similar back in the 90s? I thought he was banned from managing money for others as part of his deal. I could be wrong about all of this... thought I read it somewhere a while back. I agree Cramer isn't doing anything illegal, but the morality is another matter. He could easily be yelling to "back the truck up" on some POS that he's dumping into at the same moment. He just reeks of being a bucket shop guy."

He was a founder and owned stock in the Street.COM - he recommended it on TV and they filed a complaint against him. I believe there was a large fine.

#20 Aug 30, 2022

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