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Online Stock Tipster Agrees to Refunds, Fine

March 21, 2000|Associated Press

A man who operated a Web site dispensing stock-trading tips has agreed to repay subscribers $40,107 plus interest and pay a $15,000 fine to settle federal regulators' allegations that he committed fraud by posting false and misleading statements.

David A. Rudnick, operator of the DynamicDaytrader site, neither admitted to nor denied the allegations in his settlement Monday with the Securities and Exchange Commission.

Rudnick, 37, of Cumberland, Maine, falsely claimed that his site's stock recommendations had brought high returns, including a gain exceeding 747% last year, the SEC said in its civil complaint.

The agency alleged that Rudnick lured people to trade stocks by falsely stating they could use a real-time Internet window called "the Trading Floor" to watch the actual trades of a successful day trader. The stock trades shown on "the Trading Floor" were hypothetical, the SEC said.

"I'm glad the matter's been resolved," Rudnick said by telephone. "I've been cooperating with the SEC for several months."

Rudnick said he now will operate the site as a free investment newsletter online with no subscribers or membership fees and obtain revenue from advertising.

The SEC has pursued several cases recently involving Web sites offering stock tips for a fee.

In January, it sued a man who calls himself "Tokyo Joe"--a self-proclaimed stock expert with a Web site and an investment club--for allegedly defrauding investors by failing to tell them he was selling the same stocks he was advising them to buy.

Tokyo Joe's attorney has said he will contest the allegations in court.

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