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U.S. Securities and Exchange Commission


Litigation Release No. 19725 / June 13, 2006

SEC v. Terry's Tips and Terry F. Allen, (United States District Court for the District of Vermont, Docket No. 2:05-CV-188)

SEC and the State of Vermont Simultaneously Settle Proceedings Against Terry's Tips, Inc. and Terry F. Allen Involving Autotrading Programs

The Honorable William K. Sessions, III, United States District Judge for the District of Vermont, has entered final judgments against Terry F. Allen (Allen) and Terry's Tips, Inc. (Terry's Tips) in the Commission's pending civil action. Terry's Tips and Allen were permanently enjoined from future violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. Allen was also permanently enjoined from aiding and abetting violations of Sections 206(1) and 206(2) of the Investment Advisers Act and ordered to pay disgorgement of $100,000 and a civil penalty of $120,000. The disgorged funds will be returned to investors.

The Complaint alleged that since mid 2003, Terry's Tips and Allen used false and misleading performance projections to encourage hundreds of subscribers to enroll in an autotrading program that allowed subscribers to designate Terry's Tips to automatically direct trades in the subscriber's personal brokerage account.

Concurrently with settlement of the Commission's civil action, the State of Vermont, Department of Banking, Insurance, Securities and Health Care Administration entered an Order Imposing Administrative Sanctions and Consent to the Same against Terry F. Allen, Terry's Tips, Inc. and Vermont Option Advisors, LLC. The State of Vermont Order finds that Allen violated the Vermont Securities Act by failing to register as an investment adviser before he began soliciting investors to purchase options trading investment advice from him on the Terry's Tips website. The Department also found that Allen violated the anti-fraud provisions of the Vermont Securities Act by, among other things:

  • Using misleading performance projections and testimonials on the Website;
  • Failing to inform investors of the risks associated with his investment strategies;
  • Failing to disclose the arrangements between Allen /Terry's Tips and the brokers, including the fact that Allen and/or Terry's Tips received substantial monthly payments from the brokers as consideration for Allen's referral of clients to the brokers; and
  • Making misrepresentation to investors that his affiliated entity, Vermont Options Advisors, LLC, was registered with the Department as an investment adviser.

In addition, the State formally denied Allen's application to have Vermont Options Advisors, LLC registered in Vermont as an investment advisor. Allen must tender $10,000 in civil penalties to the State of Vermont and make restitution in the amount of $220,000 as set out in the Final Judgment entered by the Court in SEC v. Terry's Tips et al. In addition, Allen cannot seek registration in Vermont as an investment adviser or investment adviser representative for 36 months.



Modified: 06/13/2006