Friday, July 1, 2005

SEC Charges Stock Tip Service with Fraud

The SEC accused Dr. Terry Allen and his stock service, Terry's Tips, of securities fraud for making false statements on his website regarding returns from following his "autotrading" options trading program.  Among the claims on the website (www.terrystips.com) are the following:

Figure Out Your Profit BEFORE YOU INVEST!

You can figure the exact profit you will make before you invest. This amount will remain the same regardless of whether the stock stays the same, or is 60% higher in two years. I will show you exactly what two trades you should make, and give you the formula which you can use to calculate what your profit will be based on market prices on the day you invest. If it isn't at least 100%, I will give you back DOUBLE THE MONEY that you paid me to learn this trading secret.

If Your Stock Falls 30%, You Still Make A Profit!

Just in case you are wrong, and your stock doesn't stay the same or go up, you still have a chance to come out ahead. In fact, if the stock falls 30%, you still make a profit. In most cases, it wouldn't be a big profit. But how often do you make a profit when your stock falls by 30%?

I sure would love to "know" my profit before I invest, and according to the SEC Litigation Release (here): "The complaint alleges that Terry's Tips and Allen have had more than 1200 clients who have invested through its autotrading programs. The complaint also alleges that Terry's Tips and Allen published performance projections in which they stated subscribers could expect annualized returns of 100% by following Allen's trading strategies, while at the same time portfolios following these strategies were actually experiencing substantial losses."  If it sounds too good to be true, that's your tip-off.  (ph)

http://lawprofessors.typepad.com/whitecollarcrime_blog/2005/07/sec_charges_sto.html

Civil Enforcement, Fraud, Securities | Permalink

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