CFTC News Release 4455-00 (CFTC Docket 00-34)

For Release September 28, 2000

CFTC FILES ADMINISTRATIVE COMPLAINT AGAINST CTS FINANCIAL PUBLISHING, DEARBORN FINANCIAL PUBLISHING, DENNIS BLITZ, AND NICK VAN NICE ALLEGING FRAUD

Complaint Alleges that Respondents Fraudulently Marketed Commodity Futures and Options Trading-Related Products and that CTS Operated and Maintained an Internet Site that Promoted a Product Called Swing Trader, in Violation of Federal Commodity Law

WASHINGTON -- The Commodity Futures Trading Commission (CFTC) announced today the filing of a three-count administrative complaint against CTS Financial Publishing, Inc., formerly Commodity Trend Service, Inc., of North Palm Beach, Florida; Dearborn Financial Publishing, Inc.,of Chicago, Illinois; Dennis Blitz of Chicago, Illinois; and Nick Van Nice of Jupiter, Florida, alleging that the respondents fraudulently marketed commodity futures and options trading-related products.

The complaint alleges that the respondents violated sections 4b, 4o and 4c(b) of the Commodity Exchange Act (CEA) and CFTC regulations 4.41 and 33.10 by making fraudulent misrepresentations and omissions concerning, among other things, the profit potential and risk of loss in trading commodity futures and options contracts using their products.

Respondents Allegedly Fraudulently Advertised Numerous CTS products, including Futures Charts, The Million Dollar No-Risk Trading Course, Futures Options Weekly and The Million Dollar Trading Adventure

Specifically, the CFTC complaint alleges that, from 1994 through 1996 the respondents fraudulently advertised numerous CTS products, including Futures Charts, The Million Dollar No-Risk Trading Course, Futures Options Weekly and The Million Dollar Trading Adventure, by:

• misrepresenting the potential for profit through commodity futures and options trading, with little or no risk disclosure;
• omitting to disclose that the seasonal tendencies of underlying commodities are typically already factored into the respective commodity option prices;
• using testimonials related to one product to promote other products;
• falsely representing that CTS and Dearborn personnel featured in CTS advertisements were actively and successfully trading, including failing to disclose Van Nice's losing trading record;
• repeatedly presenting profitable trading results without disclosing that those results were hypothetical; and
• omitting to disclose that selling commodity options could involve unlimited risk.

CTS Internet Site Promoted Swing Trader Which, Among other Things, Allegedly Presented Hypothetical Trading Results as Actual Results and Failed to Display a Disclaimer Prominently

Additionally, the complaint alleges that in 2000, CTS operated and maintained an Internet site which promoted a product called SwingTrader, which subscribers could use to trade commodity futures and option contracts. The complaint alleges that Swing Trader falsely presented hypothetical trading results as actual, failed to provide a hypothetical disclosure that conformed to CFTC regulation 4.41(b), and failed to display a disclaimer prominently.

A public hearing has been ordered to determine whether the allegations in the complaint are true, and, if so, what sanctions are appropriate and in the public interest. Possible sanctions include an order directing the companies and individuals to cease and desist from violating the CEA and CFTC regulations, requiring payment of restitution to defrauded customers, imposing a trading prohibition, and imposing civil monetary penalties of not more than $100,000 or triple their monetary gain, whichever is greater, for each violation committed on or prior to November 27, 1996 (or $110,000 or triple the monetary gain for violations committed after November 27, 1996).

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