Seminar promoter Wade Cook has agreed to settle Federal Trade Commission charges that he and his companies violated the terms of a federal district court order barring unsubstantiated earnings claims at financial seminars and requiring rate of return disclosures and redress payments. The settlement will extend a program to provide redress for investors who paid to attend Cook's clinics, but did not make more money trading stocks than they paid for the seminars. It also will put systems in place to assure compliance with the requirement that Cook disclose the rate of return on stock market investments made by the Wade Cook Financial Corp.
Wade Cook and his companies, Wade Cook Financial Corp. (WCFC), Stock Market Institute of Learning, Inc. (SMIL), and Wade Cook Seminars, Inc. (WCSI), are based in Seattle Washington.
In October 2000, the FTC charged that WCFC used deceptive earnings claims to lure consumers into paying between $3,000 and $5,000 to attend a three-day seminar titled the "Wall Street Workshop." The FTC complaint alleged that WCFC misrepresented how much money Cook and his workshop instructors earned by investing; used misleading testimonials in promotional materials; and failed to disclose the actual rates of return earned by WCFC. The settlement barred unsubstantiated earnings claims, required that promotional materials and claims provide accurate information about WCFC's trading record, and required redress for certain consumers who signed up for the seminars.
In February 2002, the FTC alleged that Cook and his company failed to comply with that settlement agreement, and sought a civil contempt order. The FTC alleged that, despite the October 2000 agreement, WCFC and Cook were not disclosing their stock trading rates of return, were not substantiating promotional claims, had not adequately notified eligible consumers that they qualified for redress, and had not processed and paid redress claims as the court order required. The settlement announced today ends that litigation.
The settlement requires that the defendants clearly and conspicuously disclose their own rate of return for investing in ads and promotional seminars. It also requires that they obtain signed and dated disclosure forms, clearly and prominently disclosing the rate of return, from consumers prior to their paying to enroll in an investment seminar. If they do not provide the disclosure form in advance, the defendants must rescind the consumer contract for the stock market investment seminar and provide a refund at the request of the consumer. In addition, it requires that the redress program be expanded to include consumers who invested in the seminar between October 13, 2000 and February 20, 2002.
The Commission vote to accept the stipulated order was 5-0.