Release: 4657-02 (CFTC Docket No. 00-27)
For Release: June 17, 2002


CFTC Bars Kevin Kates from Trading; Advertisements Falsely Portrayed a Rosy Picture of Consistent Profits

WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) announced today the settlement of an enforcement action against Kevin Kates of Lighthouse Point, Florida, and others. The CFTC complaint, filed on September 7, 2000, charged Kates and other respondents with fraudulently marketing commodity futures trading systems (see CFTC News Release 4444-00, September 7, 2000).

The CFTC settlement order, filed on June 17, 2002, finds that, from September 1996 until April 1997, Kates, who at that time was a CFTC registrant, fraudulently marketed the commodity futures trading systems of a Florida company, Systems of Success-Window to Profit (SOS), another respondent in the case. The order finds that Kates’ fraudulent solicitations, made in newspaper advertisements and promotional materials, included presenting hypothetical trading results as actual trading results and misrepresenting the profit potential and risks associated with futures trading. For example, Kates placed advertisements for the SOS trading systems in Investor’s Business Daily, which included claims such as “make $1.2 Million in 1 year.”

The order further finds that Kates also marketed the SOS systems by providing prospective clients the purported track records of the trading systems, which portrayed a rosy picture of consistent profits, even though the actual trading results of his own clients who traded pursuant to the systems varied substantially from the track records he was distributing. The order also finds that he failed to provide the cautionary statement explaining the inherent limitations of hypothetical performance results, as required by federal commodities laws. In consenting to the entry of the CFTC order, Kates neither admitted nor denied the findings in the order or the allegations in the complaint.

The CFTC order requires Kates to cease and desist from violating the Commodity Exchange Act and CFTC regulations as charged in the complaint and permanently prohibits him from trading on or subject to the rules of any CFTC regulated markets. The order also requires Kates to pay a civil monetary penalty of up to $75,000, pursuant to an income-based, 10-year payment plan. In addition, Kates also agreed never to apply for registration or seek exemption from registration, except as provided for in regulation 4.14(a)(9), or act in any capacity requiring registration.

The following CFTC Division of Enforcement staff are responsible for this case: Charles Sgro, Beth Morgenstern, Elizabeth Brennan, Joseph Rosenberg, Eliud Ramirez, and Judith Slowly.

A copy of the Commission’s order and the CFTC complaint may be obtained at

The Commission’s action against the other respondents is still pending before an Administrative Law Judge.

Media Contact
Charles Sgro
Regional Counsel, Eastern Regional Office
CFTC Division of Enforcement (646) 746-9759

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