UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION

In the Matter of

MICHAEL G. CHRISMAN and MICHELLE R. CHRISMAN, individually and doing business as DAYTRADING INTERNATIONAL.

DOCKET NO.

COMPLAINT

The Federal Trade Commission, having reason to believe that Michael G. Chrisman and Michelle R. Chrisman ("respondents"), individually and doing business as DayTrading International, have violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission that this proceeding is in the public interest, alleges:

1. Respondents Michael G. Chrisman and Michelle R. Chrisman are the co-owners of DayTrading International, a Missouri company with its principal office or place of business at 113 West Porter Street, Kirksville, MO 63501. Individually or in concert with others, they formulate, direct, or control the policies, acts, or practices of the company, including the acts or practices alleged in this complaint. Their address is the same as that of the company.

2. Respondents have advertised, offered for sale, sold, and distributed products or services to the public, including recommendations for trading stock. Respondents sell these products or services through their Internet Web site, <www.daytradingintl.com>. Stock trading products or services sold by respondents include the "Live Interactive Trading Room," the "Daily Picks Newsletter," and the "Hot Small Caps Newsletter." The "Live Interactive Trading Room" is an Internet chat room where respondents provide "live" day trading advice during the day on when to buy and sell stocks. The "Daily Picks Newsletter," and the "Hot Small Caps Newsletter" are in the form of e-mails delivered once per day which contain advice for stock trading.

3. The acts and practices of respondents alleged in this complaint have been in or affecting commerce, as "commerce" is defined in Section 4 of the Federal Trade Commission Act.

4. Respondents have disseminated or have caused to be disseminated advertisements for their trading programs, including but not necessarily limited to the attached Exhibits A and B. These advertisements contain the following statements:

A. "Our daily and intra-day stock picks produce substantial profits within very short periods of time. Imagine the advantages you will have, trading with professionals that make their entire livelihood from the equity markets. Sign up now! View our services for more information and prices." (emphasis in original).

(Exhibit A, The home page of respondent's Web site, <www.daytradingintl.com>).

B. "Live Interactive Trading Room

The Trading Room provides live intra-day plays to our members. These trades produce fractional gains in a very short period of time. If you are looking to make 1/4's, 3/8's, 1/2's, or even points, perhaps on several occasions though out [sic] the day, then this is where you should be. These calls are made by our traders that have over 18 years of trading experience and are profitable more than 85% of the time when managed correctly. This forum allows us to alert all of our members instantaneously of breaking news stocks [sic] on the verge of exploding upwards.

. . . In order to take full advantage of this service, you should have sufficient capital to buy between 500 and 1000 shares or more, have access to real time quotes as well as a good broker with fast execution. This style of trading can be most profitable of all, because 1/4 point on 2000 shares is $500. Two or three of those each day, adds up pretty nicely.

The Trading Room will provide you with plenty of those 3, 4, and 5 point winners you always dream about. Just one decent trade pays for this service for an entire year. We do all the research for our own trading, sharing it with our members in real time helps everyone involved."

(Exhibit B, Page of respondents' Web site devoted to their services <www.daytradingintl.com/SignUp/Services>).

C. "The Daily Picks Newsletter

. . . . These plays are short-term which are usually held only 1 to 5 days to produce gains of between 2% and 10% per trade. This compounds very rapidly. Since inception in January 1996, this service has returned an average of 167% annually. This strategy is . . . the perfect opportunity for the individual trader."

(Exhibit B, Page of respondents' Web site devoted to their services <www.daytradingintl.com/SignUp/Services>).

D. "Hot Small Caps Newsletter

. . . . This has become our fastest growing service, as well as our best performer. During 1996 and 1997 the small cap recommendations returned an average annual return of 214%. As you can see, small caps stocks, or should I say, the RIGHT small cap stocks can score remarkable gains."

(Exhibit B, Page of respondents' Web site devoted to their services <www.daytradingintl.com/SignUp/Services>).

5. Through the means described in Paragraph 4, respondents have represented, expressly or by implication, that:

a. Users of respondents' trading programs can reasonably expect to trade stocks profitably with little or no risk.

 

b. Since January 1996, respondents' "Daily Picks Newsletter" program has returned an average of 167 percent annually.

 

c. During 1996 and 1997, respondents' "Hot Small Caps Newsletter" program returned an average annual return of 214 percent.

6. In truth and in fact:

a. Users of respondents' trading programs cannot reasonably expect to trade stocks profitably with little or no risk.

 

b. Since January 1996, respondents' "Daily Picks Newsletter" program has not returned an average of 167 percent annually. Respondents did not begin to offer the "Daily Picks Newsletter" until 1998.

 

c. During 1996 and 1997, respondents' "Hot Small Caps Newsletter" program did not return an average annual return of 214 percent. Respondents did not begin to offer the "Hot Small Caps Newsletter" program until 1998.

Therefore, the representations set forth in Paragraph 5 were, and are, false or misleading.

7. Through the means described in Paragraph 4, respondents have represented, expressly or by implication, that

a. Users of respondents' "Live Interactive Trading Room" program can reasonably expect to achieve profits on their trades more than 85 percent of the time.

 

b. Users of respondents' "Live Interactive Trading Room" program can reasonably expect to achieve substantial profits on a consistent basis (e.g., $500 per trade, two or three times each day).

 

c. Users of respondents' "Daily Picks Newsletter" program can reasonably expect to make short term trades, held one to five days, that achieve a rate of return of between two percent and ten percent per trade.

8. Through the means described in Paragraph 4, respondents have represented, expressly or by implication, that they possessed and relied upon a reasonable basis that substantiated the representations set forth in Paragraph 7, at the time the representations were made.

9. In truth and in fact, respondents did not possess and rely upon a reasonable basis that substantiated the representations set forth in Paragraph 7, at the time the representations were made. Therefore, the representation set forth in Paragraph 8 was, and is, false or misleading.

10. The acts and practices of respondents as alleged in this complaint constitute unfair or deceptive acts or practices in or affecting commerce in violation of Section 5(a) of the Federal Trade Commission Act.

THEREFORE, the Federal Trade Commission this day of , 2000, has issued this complaint against respondents.

By the Commission.

Donald S. Clark
Secretary

SEAL