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1
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EXHIBITS A-H
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EXTRACTED KEY WORDS
INDIGO STOCK TRADING TRADES PROFITS DELL MARKET CSCO SIGNALS ROPER INTERNET PORTFOLIOS MICROSTAR SELL ONLINE EXHIBIT ACCOUNT WINNING INVESTMENT SYSTEMS FUND WTH FUND DATA GUARANTEE REPRESENTATION RISK SARASOTA MONEY COMPLAINT INTEMET |
l Compbint
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MicroStar Research & Trading - Indigo Stock Performance Test
f2
Exhibit B
Indigo Stock Test
Here are some of Indigo's recent positions:
S10.000 UflTW PURCHASE EACH OF 9
(AhUN. AOL. BBY. CMGL EBAY. EXDS. LU. MSM.
I999 ANNUALIZED. PAST PERFORMANCE ?3cS NOT CLMRAh-TEE
Enter your stock symbol below to learn how Indigo will maximize
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2
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DECISION & ORDER
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EXTRACTED KEY WORDS
COMMISSION DISCLOSURE INDIGO INVESTMENT COMPLAINT TRADING PROGRAM FEDERAL TRADE COMMISSION ADVERTISEMENT REPRESENTATION SALE CONSUMER ACTS BUSINESS DIRECTS PRACTICES VIOLATIONS PROMOTION AGREEMENT REASON PRINCIPALS INDIGO INVESTMENT SYSTEMS OFFICERS ORDINARY CONSUMER SUCCESSORS EMPLOYMENT AFFECTING COMMERCE MANNER DISTRIBUTION IMPLICATION APPEALING |
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
COMMISSIONERS:
Robert Pitofsky, Chairman
Sheila F. Anthony
Mozelle W. Thompson
Orson Swindle
Thomas B. Leary
__________________________________________)
In the Matter of ))
INDIGO INVESTMENT SYSTEMS, INC. )
a corporation, and ))
FRANK ALFONSO, individually and as an ) DOCKET
officer of the corporation. )
)
__________________________________________)
DECISION AND ORDER
The Federal Trade Commission having initiated an investigation of certain acts and
the respondents named in the caption hereof, and the respondents having been furnished thereafter
a copy of a draft of complaint which the Bureau of Consumer Protection proposed to present to the
Commission for its consideration and which, if issued by the Commission, would charge respondents
with violations of the Federal Trade Commission Act; and
The respondents, their attorney, and counsel for the Commission having thereafter
agreement containing a consent order, an admission by the respondents of all the jurisdictional
forth in the aforesaid draft of complaint, a statement that the signing of said agreement is for
purposes only and does not constitute an admission by respondents that the law has been violated as
alleged in such complaint, and waivers and other provisions as required by the Commission's Rules;
The Commission having thereafter considered the matter and having determined that it had
reason to believe that the respondents have violated the said Act, and that a complaint should issue
stating its charges in that respect, and having thereupon accepted the executed consent agreement
placed such agreement on the public record for a period of thirty (30) days for the receipt and
Page 1 of 8
consideration of public comments, now in further conformity with the procedure described in
Commission Rule 2.34, 16 C.F.R. § 2.34,, the Commission hereby issues its complaint, makes the
following jurisdictional findings and enters the following order:
1. Respondent Indigo Investment Systems, Inc. is a corporation organized, existing and doing
business under and by virtue of the laws of the State of Florida. The mailing address and principal
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3
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COMPLAINT
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EXTRACTED KEY WORDS
TRADING INVESTMENT RESPONDENTS STOCK TRADE PROFITS REPRESENTATIONS ADVERTISEMENTS FEDERAL TRADE COMMISSION ACTS RISK REASON PARAGRAPH SIGNALS CONSUMER ENDORSER PORTFOLIOS OFFICER PRACTICES BASIS HISTORICAL DATA INTERNET STOCK PERFORMANCE TEST ROPER ACCOUNT REPRESENTATIONS SET ALLEGES COMPLAINT STOCK SYMBOL MANAGEMENT |
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
__________________________________________
)
In the Matter of ))
INDIGO INVESTMENT SYSTEMS, INC. ) DOCKET
a corporation, and ))
FRANK ALFONSO, individually and as an )
officer of the corporation. )
)
__________________________________________)
COMPLAINT
The Federal Trade Commission, having reason to believe that Indigo Investment Systems,
corporation, and Frank Alfonso, individually and as an officer of the corporation ("respondents"),
violated the provisions of the Federal Trade Commission Act, and it appearing to the Commission
proceeding is in the public interest, alleges:
1. Respondent Indigo Investment Systems, Inc. ("IISI") is a Florida corporation with its
or place of business at 8302 S. Tamiami Trail, Sarasota, Florida 34238. IISI was formerly known as
MicroStar Research and Trading, Inc.
2. Respondent Frank Alfonso is an officer of the corporate respondent. Individually or in
others, he formulates, directs, or controls the policies, acts, or practices of the corporation,
acts or practices alleged in this complaint. His principal office or place of business is the same
IISI.
3. Respondents have advertised, offered for sale, sold, and distributed investment trading
training to the public. Investment trading programs sold by respondents include the "Indigo"
trading stocks. The Indigo program issues, on a daily basis, signals advising its users to buy,
specific stocks. These signals are based upon data generated by software programs that look at
data to determine what trading patterns would, in the past, have been profitable. Respondents have
advertised Indigo on their Web sites, www.microstar-research.com, www.msindigo.com, and
www.indigoinvestor.com, as well as through Internet banners and newspaper advertisements.
Page 1 of 9
4. The acts and practices of respondents alleged in this complaint have been in or
as "commerce" is defined in Section 4 of the Federal Trade Commission Act.
5. Respondents have disseminated or have caused to be disseminated advertisements for
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4
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ANALYSIS
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EXTRACTED KEY WORDS
RESPONDENTS INDIGO TRADE ADVERTISEMENTS RISK INVESTMENT REPRESENTATIONS EARNINGS DATA PROFITS CONSENT ORDER AGREEMENT STOCK COMPLAINT SUBSTANTIATE TYPICALITY REASONABLE BASIS PUBLIC RECORD FINANCIAL RISK ALLEGES MEMBERS PROVISIONS SALE AMOUNT INCOME COMMISSION ACCORDING HISTORICAL DATA HIGH RISK PORTFOLIOS |
ANALYSIS OF PROPOSED CONSENT ORDER
TO AID PUBLIC COMMENT
The Federal Trade Commission has accepted, subject to final approval, an agreement
containing a consent order from Indigo Investment Systems, Inc., a corporation, and Frank
Alfonso, its CEO (together, "respondents") settling charges that they engaged in deceptive
advertising campaign for Indigo, a stock trading program.
The proposed consent order has been placed on the public record for thirty (30)
receipt of comments by interested persons. Comments received during this period will
part of the public record. After thirty (30) days, the Commission will again review
and the comments received, and will decide whether it should withdraw from the
make final the agreement's proposed order.
Respondents sold Indigo through ads in various media, including investment
Internet banner ads, and three websites: wwwmicrostar-research.com,
www.indigoinvestor.com. According to the FTC complaint, respondents' advertising
represented that Indigo earnings data described in the ads represent trades that were
made and that resulted in the profits stated in the advertisements; that the annual
years 1990 through 1999 enumerated in the advertisements were actually achieved by users
respondents' Indigo trading program; and that users of respondents' Indigo investment
program can reasonably expect to trade with little financial risk. According to the
Indigo earnings data described on the site do not represent trades that were actually
that resulted in the profits stated in the advertisements; instead, the data represent
hypothetical trading and are prepared with the benefit of hindsight using historical
annual returns for the years 1990 through 1999 enumerated in the advertisements were not
actually achieved by users of respondents' Indigo trading program; instead, the annual
based upon hypothetical trades using historical data. Indeed, respondents' Indigo trading
program did not exist until 1995. Additionally, the complaint alleges, users of
Indigo trading program cannot reasonably expect to trade with little financial risk;
consumers who trade in stocks risk a substantial loss of capital, and trading some
represents a high risk speculative investment.
The complaint further alleges that respondents' made several unsubstantiated
alleges that respondents' advertising represented that most users of respondents' Indigo
program who have invested in conservative portfolios have achieved an annual return of
over the past three years; that most users of respondents' Indigo trading program who have
invested in aggressive portfolios with "hot" Internet stocks have achieved returns of
hundred percent; that testimonials appearing in the advertisements for respondents' Indigo
trading program reflect the typical or ordinary experience of members of the public who
program; and that users of respondents' Indigo trading program can reasonably expect to
substantial profits on a consistent basis, whether pursuing a conservative or aggressive
strategy. Respondents, however, lacked a reasonable basis to substantiate these claims,
according to the complaint.
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5
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AGREEMENT
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EXTRACTED KEY WORDS
COMMISSION COMPLAINT REPRESENTATION TRADING PROGRAM INDIGO INVESTMENT FEDERAL TRADE COMMISSION PROPOSED RESPONDENTS DISCLOSURE AGREEMENT ADVERTISING OFFICER SALE CONSUMER FRANK ALFONSO INDIGO INVESTMENT SYSTEMS DRAFT COMPLAINT BUSINESS DIRECTS MANNER PRACTICES ACCEPTANCE VIOLATION PURSUANT NOTIFY CONTRADICT SUCCESSORS EMPLOYMENT PROMOTION AFFECTING COMMERCE |
UNITED STATES OF AMERICA
FEDERAL TRADE COMMISSION
1
In the Matter of >
1
INDIGO INVESTMENT SYSTEMS, INC. > FILE NO. 002-30 15
a corporation, and ) ) AGREEMENT CONTAINING
FRANK ALFONSO, individually and as an 1 CONSENT ORDER
officer of the corporation. 1
1
)
The Federal Trade Commission has conducted an investigation of certain acts and
practices of Indigo Investment Systems, Inc., a corporation, and Frank Alfonso,
as an officer of the corporation ("proposed respondents"). Proposed respondents, having been
represented by counsel, are willing to enter into an agreement containing a consent order
resolving the allegations contained in the attached draft complaint. Therefore,
IT IS HEREBY AGREED by and between Indigo Investment Systems, Inc., by its duly
authorized officer, and, Frank Alfonso individually and as an officer of the corporation,
counsel for the Federal Trade Commission that:
1.a. Proposed respondent Indigo Investment Systems, Inc. is a Florida corporation with its
principal office or place of business at 8302 S. Tamiami Trail, Sarasota, Florida 34238.
1 .b. Proposed respondent Frank Alfonso is an officer of the corporate respondent.
Individually or in concert with others, he formulates, directs, or controls the policies,
practices of the corporation. His principal office or place of business is the same as
Indigo Investment Systems, Inc.
2. Proposed respondents admit all the jurisdictional facts set forth in the draft
This agreement is for settlement purposes only and does not constitute an admission by
respondents that the law has been violated as alleged in the draft complaint, or that
alleged in the draft complaint, other than the jurisdictional facts, are true.
3. Proposed respondents waive:
a. Any further procedural steps;
Page 1 of 8
b. The requirement that the Commission's decision contain a statement of
fact and conclusions of law; and
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