Release: 4730-02
For Release: December 24, 2002

CFTC SUES LAS VEGAS MAN FOR FRAUDULENTLY PROMOTING HIS COMMODITY TRADING METHOD

CFTC Alleges Charles Cox Made False Claims Concerning Profits Generated by His Commodity Trading Method

WASHINGTON, D.C. – The Commodity Futures Trading Commission (CFTC) has filed and settled an enforcement action against Stephen C. Cox of Las Vegas, Nevada, finding that he misled customers by suggesting that he earned his living through trading his commodity trading method, the Natural Order.

The CFTC issued an order finding that, from January 2001 through August 2002, Cox advertised for the Natural Order trading method in various magazines. In those advertisements, Cox represented that he was a full-time trader and listed specific trades and resulting profits earned by using the Natural Order method, thus implying that he made a successful living trading commodity futures contracts using the method, the order finds. Cox, however, did not earn his living as a trader, the order finds. Cox failed to disclose that during the first twelve months of the relevant time period that he was advertising his methodology, his personal commodity futures trading suffered a net trading loss, although during the last eight months he had a net trading profit, according to the order.

The settlement order further finds that Cox identified specific trades in his advertisements, thus creating the impression that each trade represented an actual profitable trade he had made using the Natural Order method when, in fact, half of the listed trades were hypothetical, which Cox failed to disclose. Cox also failed to provide the disclosure concerning the inherent limitations of hypothetical results, as required by the Commission’s regulations. Finally, Cox misrepresented the risks involved in trading commodity futures contracts by claiming that his method provided “uncanny accuracy” with “much less risk,” according to the order.

In consenting to the entry of the CFTC order, Cox neither admitted nor denied the findings made in the Commission order.

The CFTC order requires Cox to cease and desist from violating the Commodity Exchange Act and CFTC regulations, orders Cox to pay a civil monetary penalty of $25,000, and requires that Cox comply with certain undertakings, which include not making unsubstantiated claims of profits or risk in connection with the use of a commodity trading system.

-- more --

The following CFTC Division of Enforcement staff are responsible for this case: Richard Foelber and Todd Kelly.

Copies of the Commission’s Order can be found at http://www.cftc.gov/

Media Contact:
Gretchen Lowe
Associate Director
Division of Enforcement, (202) 418-5379

* * * * *