If it's coming from France, it must at a minimum be bundled with a white flag
Is autotrading legal?
- Thread starter ginux
- Start date
If it's coming from France, it must at a minimum be bundled with a white flag
GTS, you made a good point. I see TWO people here. the newsletter that offers advice and an unrelated entity, the C2 folks that sell or lease a software program.
For the newsletter, as I understand it some fellow merely offers advice to the general public - anyone who wishes to pay for a subscription. The advice is the same to all who subscribe. There's no special addendum saying "Jerry Jones, should not enter stock tip #3, and Mary Smith should double up on stock tip #2"
In this case the newsletter, under the rights of free speech, does not register with the SEC.
Then as to the C2 forks, they offer a software program to the general public. Anyone who has the money can pay for it. C2 offers no stock advice. In this case there's no registration required since there no investment advice whatsoever.
Now if C2 and the newsletters were the same guy, it might be a different story, but we're not addressing that.
Are we saying that the newsletter is INTERNALLY tweaked somehow exclusively (flagged) for those who are using the independently obtained autotrading software?
If so, if the newsletter KNOWS who is autotrading, and they know when it is turned on, and they know what parameters it is it set at, AND if they must grant their permission or otherwise send out the information differently than for other customers, then I might change my tune.
But if not - then it is the BROKER who accepts the order that must be registered, not the newsletter or the software.
Example: You tell your broker that every morning to "automatically" buy at the open, $25,000 of the first stock chart highlighted in the IBD newspaper. Obviously IBD is not going to need to get registered because you happen to use their "advice." Even if you informed IBD that you were doing do, it is still beyond their direct control. You or your broker are making the decision to use or to discard the IBD advice.
Sorry dude. that bs ain't gonna convince the SEC for someone has tried it and failed.
http://www.moneyandmarkets.com/content/Settlement.html
Let me quote:
We didnââ¬â¢t charge our subscribers extra. And we did not accept compensation of any kind from the brokers. Our role was to let our subscribers know that the auto-trading service existed, give them a list of brokers that offered auto-trading, and send the auto-trading brokers copies of our newsletters at the same time as we sent them to all other subscribers.
The SEC alleged that our references to auto-trading made us investment advisers and that we should have registered as advisers with the SEC. And as part of our settlement, we are paying fines and penalties of $2.1 million. By settling, we avoid a long court battle so we can continue to focus all of our efforts on providing you with the top-notch service that youââ¬â¢ve learned to rely upon.
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Get it now, boy?
This is what they have done now:
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Additional Step 1. We have ceased mentioning auto-trading in our literature and stopped sending copies of our newsletters to brokers. This helps ensure we are acting exclusively as publishers.
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So as far as i'm concerned, you want to allow autotrading or you mention anything about autotrading on the site, the publisher has to be registered.
The actual work involved is not hard at all. It may be time consuming, but it is not hard. If it was hard for you, I suggest hiring professionals to help.
If you bothered to read my posts, I said C2 could exist by either getting rid of auto-trading all together or only allowing those that are registered to be auto-traded. Another simple and easy way to work with the regulations in place. Not sure how that is 'ridiculous' but apparently what I consider easy (exams, paperwork, etc.) you consider difficult, so it makes sense that you think C2 is done if the SEC gets involved. Some people only operate from within their tiny, tiny box and can't step out of that for one second without being thrown into a panic.
I just noticed there's a detailed explanation on this added to the C2 website.
http://www.collective2.com/cgi-perl/session.mpl?&displaypage=autotrade_legal.sessionhtml
http://www.collective2.com/cgi-perl/session.mpl?&displaypage=autotrade_legal.sessionhtml
I personally consider this a grey area, subject to the facts and circumstances of each individual situation. AND SO DOES THE SEC.
The SEC link http://www.sec.gov/investor/pubs/autotrading.htm says: "Generally, the SEC considers firms that publish investment newsletters and that also engage in âauto-tradingâ to be investment advisers.
On that same link the SEC says: "...this information ... in neither a legal interpretation nor a statement of SEC policy."
Freedom of speech (as in publishing a stock newsletter) is a constitutional right that the SEC can not meddle with. Whereas, advising people individually which stocks they are to buy and sell is an investment advisor, subject to SEC registration.
IMO, the SEC is wrong with their broad scope view regarding "autotrading," but my opinion and $4 just gets you a cup of coffee. But if you read the SEC link I gave above, even the SEC says that their entire web page on autotrading is just staff member blowing smoke and is not SEC policy.
Some links summarizing this matter:
http://www.collective2.com/cgi-perl/board.mpl?want=listmsgs&boardid=9323885&threadhilite=1838
where it says: "Please understand. No regulation prevents people from offering non-personalized advice to people. That is called publishing. It is protected by the First Amendment. Period. Since the vendors here are -- by the very nature of this platform -- forced to offer standardized, non-personal advice; and since the vendors do not place trades in broker accounts (the actual trading instructions come from the owner of the broker account), and since -- indeed -- system vendors don't even know who is trading their advice and who is not, it is really a stretch to say otherwise."
http://www.collective2.com/cgi-perl/session.mpl?&displaypage=autotrade_legal.sessionhtml
where is says: "Collective2 does not publish or sell its own trading advice. We are an electronic clearinghouse for other parties' trading systems."
http://www.collective2.com/cgi-perl...35107643145526663&displaypage=faq.sessionhtml where they say: âYou must simply restrict your activity to publishing non-personalized advice which your clients can choose to act upon or not. (Note that using Collective2 to disseminate your trading advice via a Web site and email is considered publishing.) Remember that our right to publish and say what we like is protected by the First Amendment, a right that our citizens fight for, to this day. No small matter, that.â
http://www.moneyandmarkets.com/content/Settlement.html and http://www.moneyandmarkets.com/press.asp?rls_id=336&cat_id=25& where Weiss Research says: âThe SEC alleged that our references to auto-trading made us investment advisers and that we should have registered as advisers with the SEC.â âWe have ceased mentioning auto-trading in our literature and stopped sending copies of our newsletters to brokers.â
Now in the case of Weiss Research, they were being beat up by the SEC, and so they made an economic decision to cave in under SEC pressure, rather than fight the SEC any further. IMO, stopping the mailing newsletters to brokers is akin to Barrons and Investors Business Daily stopping the sending subscriptions to Merrill Lynch offices. Totally overboard and just sheds light on the power of an SEC organization run amuck.
Picking on Collective2 for delivering newsletters would be similar to picking on AOL, Yahoo, the telephone company or the U.S. Post Office for delivering investment advice.
The distinction is clearly stated here: http://www.collective2.com/cgi-perl...35107643145526663&displaypage=faq.sessionhtml "However, you must be aware of certain restrictions.
You cannot provide individualized advice to clients. That is, you cannot offer different advice to different clients based on their individual financial situations.
Allowed: "Attention all subscribers to my trading system: Buy IBM because I believe it is going up!"
Not allowed: "Dear John Doe: based on our conversation earlier today, in which you told me you were nearing retirement, I think you should buy IBM, because it will appreciate in value!"
The other important restriction is that you cannot manage clients' trading accounts on their behalf. You can't have access to their money, or issue trading instructions to their brokers. Otherwise you cross the line from publishing, which is allowed, to asset-management, which requires registration."
i don't know what's the purpose of this post. If this post is supposed to support the fact that autotrading need not be regulated by SEC, i'm sorry you have failed badly.
The references you used have already proved that SEC is not happy with newsletter publishers who mention anything to do with autotrading.
This is no grey area. The SEC"s past actions have made it a done deal.
You mention or provide autotrading? You got to be regisered. No way round this.
ginux, You apparently failed to read the link I provided to the SEC web site where in no uncertain terms the staff person wrote that the opinion given regarding "autotrading" was his own individual personal opinion and was under no circumstances to be considered an official legal interpretation or statement of SEC policy.
There is no way that Collective2 is giving out individual investment advice via "autotrading" or otherwise. As a matter of fact Collective2 is not even giving out any investment recommendations at all. Collective2 seems to be a delivery service or pipeline that delivers published information, not much different than Publishers Clearinghouse is a pipeline to deliver magazines in conjunction with the U.S. Post Office.
I've posted links to support my opinion.
Here's another: http://www.sec.gov/news/press/2005-98.htm
"Auto-trading is a[n] investment vehicle in which subscribers to online investment newsletters open designated auto-trading accounts at brokerage firms selected by the newsletters."
There's no way this describes Collective2.
The above link is about a SEC case against Terryâs Tips autotrading service. But this is not at all what Collective2 does, as detailed here: http://www.sec.gov/litigation/complaints/comp19291.pdf where it says: "23. Terryâs Tips has several autotrading strategies available to its clients. Terryâs Tips advises its clients individually, by telephone or e-mail, as to which strategies would be most appropriate for the individual client." "33. This e-mail explains that the client must open a brokerage account at either optionsXpress or thinkorswim.com, the two broker-dealers which have autotrading arrangements with Terryâs Tips."
Here's another link I just found:
http://www.omgili.com/preview/aHR0c...vdmIvc2hvd3RocmVhZC5waHA/dGhyZWFkaWQ9OTQ2NDk=