FTC Sues Irvine Stock-Trading Firm Over Ads

The Federal Trade Commission said Monday it sued an Irvine stock-trading advisor, accusing the firm of false and deceptive advertising.

The FTC is asking the U.S. District Court in Santa Ana to order Timothy Cho and Tim Cho Investment Corp. to stop making false claims about “day trading” in the company’s investment seminars and to “provide consumer redress or give up their ill-gotten gains.”

Cho denied the FTC charges and said he plans to fight them in court.

The lawsuit is the seventh filed by the FTC since May 2000, when it began a crackdown on allegedly deceptive trading practices. The FTC has been working with the Commodity Futures Trading Commission and the Securities and Exchange Commission.

Since the crackdown began, the FTC said, courts have halted the claims of 14 online trading firms that promised to share the secrets of making easy money with little risk.

In the latest case, the agency said, Cho advertised a $6,000, two-day training seminar on trading stocks, currencies and futures contracts. The FTC said Cho’s ads deceptively claimed, among other things, that the course would enable traders to make as much as 18% profit per trade, to earn more than $1 million a year and to get a guaranteed 1,000% return in trading stock index futures contracts within one year.

The ads “conveyed that investors can expect to trade profitably with little financial risk,” the FTC said.

Cho said the FTC had taken material from his company’s Web site out of context and “manipulated” it to make it appear false and misleading. “We can prove everything that we advertise,” he said.

Cho said only a fraction of the company’s 140-page manual is devoted to day trading. He noted that the company Web site contains disclosures and disclaimers warning investors they may not ring up big profits and could lose money instead.