FOR IMMEDIATE RELEASE 2000-57 SEC Sues Internet Stock Picker For Using Fraudulent Advertising To Lure Day Traders To His Stock Picking Service Third Case In Recent Months Against Operators Of Stock Recommendation Web Sites Washington, DC, May 1, 2000 - The Securities and Exchange Commission today brought and settled civil administrative fraud charges against Robert Garganese, a convicted felon, and his company Genesis Trading for enticing day traders to subscribe to his stock picking service through false and misleading advertising. Garganese, of Las Vegas, NV, ran the web site from August 1998 until October 1999, when he began serving a one-year prison term for money laundering and telemarketing fraud charges unrelated to this action. This case is part of a joint initiative by the SEC, the Federal Trade Commission, and the Commodities Futures Trading Commission to crack down on deceptive day trading promotions. The SEC alleges that Garganese used his web site to fraudulently describe Genesis Trading as "a company composed of professional traders" that has created a system to track institutional buying and selling. In reality, Garganese, who is not a professional trader, was the only person to run the web site. Additionally, the SEC alleges that the Genesis stock picks were not the product of a proprietary system, but, rather, were the product of commercially purchased software that does not specialize in tracking institutional buying and selling. As to the profit potential of the system, the SEC alleges that Garganese boasted, without any basis, that all his subscribers need do is "enter the trade and ride the wave of what is usually a $2-$10 price move within a few days." The SEC also alleges that the Genesis Trading web site falsely claimed that more than 80 percent of Genesis Trading's recommended trades were profitable. Genesis Trading and Garganese have agreed to settle this matter. Each has agreed to cease-and-desist from violating the federal securities laws and Genesis will provide a copy of the Commission's Order to all current and prospective subscribers for a period of one year. Actions against 13 other on-line firms have been filed today by the FTC and CFTC similarly focusing on web sites in the business of selling stock or commodity recommendations and trading strategies to day traders. The SEC previously has brought two cases of this nature. See, SEC v. Yun Soo Oh Park, a/k/a "Tokyo Joe," Lit. Rel. No. 16399 (January 5, 2000) and SEC v. DynamicDaytrader, Lit. Rel. 16475 (March 20, 2000). Investors should also read "Day Trading: Your Dollars at Risk" (www.sec.gov/consumer/daytips.htm) to learn about the risks of day trading and how difficult it is to profit from this strategy. Investors who use the Internet to invest or access investing information should also read the SEC's online brochure, "Internet Fraud: How to Avoid Internet Investment Scams" (www.sec.gov/consumer/cyberfr.htm). This brochure tells investors how to spot different types of Internet fraud, what the SEC is doing to fight Internet investment scams, and how to use the Internet to invest wisely. Contacts: David M. Levine Senior Adviser to the Director of Enforcement 202.942.4535 Matthew P. Moro Deputy Chief, Office of Internet Enforcement 202.942.4525 # # #