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john cappello wrote:
>>> P.S. to Randall and a couple of others who asked about my other trading
profitability.Here is the perspective---Last year I put $70,000 in Master
Suite in April and $240,000 more in Aug-total $310,00.I ended the year with
a $170,000 Master Suite profit less $20,000 costs and losses with other
system teting.
>
>This year I was up as much as $160,000 in the first quarter and am holding
steady at $35,000 at this point.I hate the pain but I also have 10 years of
data whereby recovery from sub-par quarters has been impressive.My other
trading systems are profitable but not as significant in dollars yet
because less money is allocated at this time. <<<
Before anyone gets too excited by these results, read below the two notices
I pulled off the CFTC website regarding R&W Technical Services, Master
Suite, and system fraud. Forewarned is forearmed...
-Tony Haas (not a fan of the CFTC, but the facts speak for themselves)
Release: #0002-97
For Release: December 4, 1997
CFTC ALJ FINDS R&W TECHNICAL SERVICES, LTD., GREGORY M. REAGAN AND MARSHALL
L. WORSHAM VIOLATED ANTI-FRAUD, REGISTRATION AND RECORDKEEPING PROVISIONS OF
THE COMMODITY EXCHANGE ACT IN CONNECTION WITH SALES OF COMPUTERIZED TRADING
SYSTEMS
Judge Issues Cease And Desist Orders, A Permanent Trading Prohibition And
Imposes Civil Monetary Penalties of $7,125,000
Washington -- In an Initial Decision issued on December 1, 1997, Commodity
Futures Trading Commission Administrative Law Judge Bruce C. Levine found
that R&W Technical Services Ltd. (R&W), a seller of computerized commodity
futures trading systems based in Houston, Texas, and its principals Gregory
M. Reagan of Sugarland, Texas, and the late Marshall L. Worsham of Houston,
Texas, engaged in fraudulent solicitation and false advertising, acted as
commodity trading advisors (CTAs) without the required registration, and
failed to produce required books and records to Commission representatives.
The ALJ also found that Reagan and Worsham were liable for R&W's violations
as controlling persons of the firm and that they willfully aided and abetted
R&W's violations. The ALJ ordered R&W and Reagan to cease and desist from
further violations of the Act and Regulations, permanently prohibited R&W
and Reagan from trading commodity futures and ordered R&W and Reagan jointly
and severally to pay a civil monetary penalty of $7,125,000.
Describing the matter as "a story of high-tech charlatanism," the ALJ found
that the respondents' representations that their trading systems had been
proven by "extensive systematic actual trading," were false, and "at best,
the trades occurred in cyberspace, and at worse, were nothing more than the
product of respondents' imagination." The ALJ concluded that in making such
unsupported trading claims the respondents "defrauded their customers." The
ALJ also found that the respondents "undertook an advertising and
promotional campaign characterized by fantastic claims of profitability and
blatant falsehoods concerning their trading experience."
The Judge also concluded that respondents violated the statutory requirement
that CTAs be registered. He found that "[r]espondents' sale of computer
trading programs" met the statutory definition "precisely" and that he was
bound by previous Commission precedent to turn aside respondents' claims
that their activity fell within a statutory exclusion and that the
application of the CEA to their activities violated the First Amendment.
The Commission's four-count administrative complaint, Docket No. 96-3, was
filed on March 19, 1996, and a hearing was held on August 13, 1997. (See
CFTC News Release #3996-95, March 20, 1996.)
The parties have 15 days from the entry of the ALJ's order to file an appeal
with the Commission. If the decision is appealed, or if the Commission
chooses to review the decision on its own initiative, the decision does not
become final and the sanctions do not take effect pending the outcome of the
Commission's review.
Release:#3996-95
For Release:March 20, 1996
CFTC FILES ENFORCEMENT ACTION ALLEGING FRAUD AGAINST
R&W TECHNICAL SERVICES LTD. AND TWO INDIVIDUALS, ALL OF TEXAS
CFTC Charges the Respondents with Fraudulently Soliciting Customers in
Connection with the Sale of their Commodity Futures Trading System, and
Operating as Unregistered CTAs, Among other Charges
WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced
today that on March 19, 1996, it filed a four-count administrative complaint
against R&W Technical Services, Ltd., of Houston, Texas, a limited liability
company that sells computerized commodity futures trading systems, and two
individuals: Gregory M. Reagan, of Sugarland, Texas; and Marshall L.
Worsham, of Houston. None of the defendants has ever been registered with
the CFTC.
The complaint charges the respondents with committing fraud in connection
with their solicitation of individuals to purchase futures trading systems,
including the CurrencyMaster and the Master Suite systems. The basic
CurrencyMaster trading system sold for $3,495, and the Master Suite trading
system sells for approximately $13,500. Both systems are advertised to give
trading signals in various financial futures contracts. The respondents are
also charged with acting as commodity trading advisors (CTAs) without being
registered with the CFTC, fraudulent advertising, and failure to produce
required books and records, all violations of the Commodity Exchange Act and
CFTC regulations.
According to the complaint, since at least April 1993, R&W has been
soliciting customers to purchase its trading systems using a variety of
misrepresentations and omissions of material fact in their advertisements
and promotional materials. For example, the solicitations allegedly
presented to potential investors include a track record of trading profits
of $583,350 that purportedly resulted from the use of the Master Suite
trading system for seven years. Solicitations also claimed, the complaint
alleges, that the CurrencyMaster system generates 323 percent net profits
trading just one contract at a time and consistently generated triple-digit
profits, year in and year out, for six years from 1987 to 1992.
Contrary to respondents' representations regarding the success rate of their
trading systems, the complaint alleges that the representations of profit
were not based on any real trading by the respondents, that the respondents
had not actually made the represented profits from the trading system, and
that R&W has never had an account to trade commodity futures.
A public hearing is to be held to determine whether the allegations are true
and, if so, what sanctions, if any, should be imposed. Possible CFTC
sanctions include: civil penalties of up to $100,000 or triple the monetary
gain against each respondent for each such violation; trading prohibitions;
restitution to customers; and cease and desist orders.
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