Day-trading firm All-TechDirect Inc. and Chief Executive Harvey I. Houtkin agreed Wednesday to pay a total of $525,000 to settle allegations of improper margin lending and misleading advertising, regulators said.
Montvale, N.J.-based All-Tech, one of the largest day-trading brokerages, agreed to pay $475,000 in fines and to hire an outside consultant to review its procedures to resolve filings by the Securities and Exchange Commission and the National Assn. of Securities Dealers.
Houtkin agreed to pay $50,000 to settle NASD allegations also related to the firm's day-trading business. Other All-Tech officers also will pay fines.
The firm and Houtkin settled the matters without admitting or denying the charges.
The NASD had alleged that Houtkin and All-Tech made misleading statements in print and radio ads, on All-Tech's Web site and during Houtkin's TV appearances.
Houtkin had claimed, for example, that "perhaps three in 10" people trained as day traders by All-Tech would successfully make money.
In fact, few people ever make money in day trading, state securities regulators have found.
Day traders typically try to profit by making a series of rapid-fire trades in a single session, buying and selling shares to catch often small price moves.
The NASD and the SEC also had alleged that All-Tech made millions of dollars in margin loans to customers that exceeded legal limits.