(1) Having watched hundreds of his trades with our methodology, I am amazed at his high percentage of wins. When he's wrong, which isn't very often, he can tell you why. I've seen him do dozens of consecutive trades without a loss in the S&P. On the average, I've seen him make $1,000-$2,000 a day trading one S&P contract. When he trades more contracts, he makes more money;

and

(2) The methodology is called, "Rhythm of the Markets" and Ed has made a substantial amount of money trading it. He is a trader who makes his living trading everyday.

1. Moore Violated Section 4b(a)(i) and (iii) of the Act

Section 4b(a)(i) and (iii) of the Act provides that it shall be unlawful, in or in connection with any order to make or the making of a futures contract, for or on behalf of any other person, (i) to cheat or defraud, or attempt to cheat or defraud, such other person, or (iii) willfully to deceive or attempt to deceive such other person by any means whatsoever in regard to any such order or contract or the disposition or execution of any such order or contract, or in regard to any act of agency performed with respect to such order or contract for such person. Misrepresentations and omissions of material facts made with scienter regarding futures transactions constitute fraud under Section 4b(a) of the Act.³ Additionally, Section 4b(a)(i) and (iii) requires that the material misrepresentations and omissions of material facts be made "in connection" with futures transactions.⁴

Moore's knowing misrepresentations on his Web site that he made his living trading S&P 500 futures using Rhythm of the Markets and that he was a profitable "super trader," when he had not traded futures for his own account, constitute fraud within the meaning of Section 4b(a)(i) and (iii) of the Act. In the Matter of R&W Technical Services, Ltd., [Current Transfer Binder] Comm. Fut. L. Rep. (CCH) �27,582 at 47,742 (CFTC Mar. 16, 1999) (falsely claiming profitable trading through respondents' own use of the trading system constitutes fraud; "[t]he use of a trading system by its developers is important to reasonable consumers because it reflects a meaningful vote of self-confidence and a sign of authenticity") aff'd in relevant part, R&W Technical Services, Ltd. v. CFTC, 205 F.3d 165, 169-70 (5^th Cir. 2000). Moore's representations on his Web site that his system was equally effective trading in commodity futures contracts and OEX options and that the OEX trading results were based on his actual trading using the system when he had not traded OEX options between March 1999 and June 2000 also constitute fraud, in violation of Section 4b(a)(i) and (iii) of the Act.

In addition, Moore's representation that his system had generated profits and positive rates of return, when he knew that such claims were not based on actual trading, but rather on hypothetical or simulated trading, constitutes fraud, in violation of Section 4b(a)(i) and (iii) of the Act. "Because simulated results inherently overstate the reliability and validity of an investment system, and because extravagant claims understate the inherent risks in commodities trading, a reasonable investor would find [such] fraudulent misrepresentations to be material." R&W Technical Svcs., 205 F.3d at 170. See also CFTC v. Skorupskas, 605 F. Supp. 923, 933 (E.D. Mich. 1985) (solicitations aided through use of false or deceitful performance tables violated Section 4b(a)).

2. Moore Violated Section 4o(1) of the Act and Section 4.41(a) of the Regulations

Section 4o(1) of the Act prohibits CTAs from (a) employing any device, scheme or artifice to defraud any client or participant or prospective client or participant, or (b) engaging in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or participant or prospective client or participant. Section 4.41(a) of the Regulations prohibits a CTA or principal thereof from advertising in a fraudulent or misleading manner.

In order to establish a violation of Section 4o(1) of the Act and Section 4.41(a) of the Regulations, the Division must prove that the respondent was (i) a CTA or, with respect to Section 4.41(a) of the Regulations, a principal thereof, and (ii) either (a) employed any device, scheme, or artifice to defraud any client or prospective client, or (b) engaged in any transaction, practice, or course of business which operates as a fraud or deceit upon any client or prospective client. Section 4o(1) of the Act, which also requires the use of the mails or any means or instrumentality of interstate commerce, prohibits both registered and unregistered CTAs from defrauding their clients.⁵ Section 4.41(a) of the Regulations also applies to all CTAs, regardless of whether those CTAs are required to be registered.

Under Section 1a(5) of the Act, in order to establish that someone is a CTA, it must be shown that the person (i) advised another about the value or advisability of trading in futures contracts, (ii) "either directly or through publications, writings or electronic media," (iii) for compensation or profit. Section 1a(5) of the Act, 7 U.S.C. � 1a(5).⁶ Moore, who is registered as a CTA, gave commodity futures trading advice for compensation or profit and, therefore, is a CTA. ⁷

The same conduct by Moore that violated Section 4b(a)(i) and (iii) of the Act also violated Section 4o(1) of the Act and Regulation 4.41(a) because Moore engaged in that conduct in his capacity as a CTA. R&W Technical Svcs., �27,582 at 47,745 ("Because we have found that [respondents] violated Section 4b(a) of the Act and that they acted as CTAs, further analysis is not needed to conclude that [respondents] also violated Section 4o(1) of the Act"), aff'd in relevant part, R& W Technical Services v. CFTC, 205 F.3d 165 (5^th Cir. 2000); Skorupskas, 605 F.Supp. at 932-33.

1. the filing and service of a Complaint and Notice of Hearing;

2. a hearing;

3. all post-hearing procedures;

4. judicial review by any court;

5. any objection to the staff's participation in the Commission's consideration of its Offer;

6. all claims which he may possess under the Equal Access to Justice Act, 5 U.S.C. � 504 (1994) and 28 U.S.C. � 2412 (1994), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996, Pub. L. No. 104-121, �� 231-232, 110 Stat. 862-863, and Part 148 of the Regulations, 17 C.F.R. �� 148.1, et seq. (2000), relating to, or arising from, this action, and he shall not assert any right under the Equal Access to Justice Act to seek costs, fees, or other expenses relating to, or arising from, this proceeding; and

7. any claim of double jeopardy based upon the institution of this proceeding or the entry in this proceeding of any order imposing a civil monetary penalty or any other relief;

1. orders Moore to cease and desist from violating Sections 4b(a)(i) and (iii) and 4o(1) of the Act and Regulation 4.41(a);

2. orders Moore to pay a civil monetary penalty in the amount of Fifteen Thousand Dollars ($15,000);

3. orders that Moore's registration with the Commission as a Commodity Trading Advisor be suspended for a period of six (6) months from the date of this Order; and

4. orders Moore to comply with his undertakings as set forth below.

A. he shall not misrepresent, expressly or by implication:

1. the performance, profits or results achieved by, or the results that can be achieved by, users, including himself, of any commodity futures or options trading system or advisory service; and

2. the risks associated with trading pursuant to any commodity futures or options trading system or advisory service;

B. he shall not present the performance of any simulated or hypothetical commodity interest account, transaction in a commodity interest or series of transactions in a commodity interest unless such performance is accompanied by the following statement, as required by 17 C.F.R. � 4.41(b):

In doing so, Moore shall clearly identify those hypothetical or simulated performance results that were based, in whole or in part, on hypothetical trading results;

C. he shall not make any representation of financial benefits associated with any commodity futures or options trading system or advisory service without first disclosing, prominently and conspicuously, that futures trading involves high risks with the potential for substantial losses;

D. he shall not represent, expressly or by implication:

E. neither he nor any of his agents or employees under his authority or control shall take any action or make any public statement denying, directly or indirectly, any findings or conclusions in this Order or creating, or tending to create, the impression that this Order is without a factual basis; provided, however, that nothing in this provision affects Moore's (1) testimonial obligations; or (2) right to take contrary factual or legal positions in other proceedings to which the Commission is not a party. Moore will undertake all steps necessary to assure that all of his agents and employees under his authority and control understand and comply with this undertaking.