For Release July 30, 2002
CFTC CHARGES MICHIGAN RESIDENT WITH INTERNET FRAUD AS PART OF FEDERAL “NETFORCE” INITIATIVE
Complaint Alleges Fraudulent Promotion of Internet Trading System
WASHINGTON, D.C. – The United States Commodity Futures Trading Commission (CFTC) announced today that it filed a three-count administrative complaint on July 30, 2002, which alleges that, from at least March 2000 through the present, Stephen Alan Pierce, an Ann Arbor, Michigan, resident and registered commodity trading advisor, committed fraud by using misleading advertising on the internet to solicit customers to purchase commodity futures trading recommendations.
The CFTC’s action is being brought as part of the Federal Trade Commission’s Midwest Netforce Internet Fraud Initiative, in which the CFTC is joining four other federal agencies, 11 state attorneys general, and 20 state and local law enforcement agencies in targeting internet scam artists who have bilked tens of thousands of consumers out of millions of dollars.
Over the last two years the CFTC has brought over 20 internet actions as a result of
its regular “internet sweeps.” The CFTC has also advised consumers of some
of the dangers of internet fraud in its May 2000 Consumer Advisory -- Beware of
Websites Selling Commodity Trading Systems that Guarantee High Profits with Minimal
Risks, which can be found on the CFTC’s website at http://www.cftc.gov/enf/00orders/enfposting4-tradingsystem.htm.
Pierce Allegedly Overstated Profits and Performance Record
Specifically, the CFTC complaint alleges that Pierce promoted and offered to the public futures trading systems, referred to as the “Rapid Fire Swing Trading” and “The Chart Traders” systems, through advertisements over numerous internet websites that Pierce created and maintained. Pierce, the complaint states, made false representations of profits, overstated profit potential, and mischaracterized the performance record of the systems, in violation of antifraud provisions of the Commodity Exchange Act (CEA) and CFTC regulations.
According to the complaint, the fraudulent misrepresentations included promises of huge profits and claims that the performance records of the trading systems were based on actual trades, when they were actually based on simulated or hypothetical trades. The complaint further alleges that Pierce had more than 700 subscribers to his trading recommendation services who paid him aggregate fees of more than $350,000.
Further, the complaint alleges that Pierce presented the performance record of simulated or hypothetical commodity interest account trading without an appropriate statement of disclaimer, warning of the limitations of such performance record.
Finally, the CFTC complaint alleges that Pierce failed to keep required records, such as the names and addresses of his customers, as required by the CEA and CFTC regulations.
A public hearing has been ordered to determine whether the allegations in the administrative complaint against Pierce are true and, if so, what sanctions are appropriate. Possible sanctions include a cease and desist order, trading prohibitions, suspension or revocation of registration, restitution to customers, and civil monetary penalties of up to $120,000 or for each violation of the CEA, or triple the monetary gain to Pierce, whichever is greater.
The following Division of Enforcement staff are responsible for the case: Scott R. Williamson, Robert J. Greenwald, Mark H. Bretscher and Joy H. McCormack.
Media Enforcement Contact:
Scott R. Williamson
Acting Regional Counsel
Central Regional Office
CFTC Division of Enforcement
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