BABY BOOMERS: FTC Sues Online Trading Academy for Running an Investment Training Scheme
Posted on 02/15/2020
The U.S. Federal Trade Commission (FTC) filed a lawsuit against Irvine, California-based Online Trading Academy (OTA), an investment training scheme company. The company is led by Eyal Shachar. Online Trading Academy markets its products to customers, especially baby boomers in the United States. The FTC believes that OTA uses false or unfounded earnings claims to sell “training programs” costing as much as US$ 50,000. FTC claims Online Trading Academy collected more than US$ 370 million from consumers nationwide within the last six years.
The FTC Commission vote authorizing the staff to file the complaint was 5-0. The complaint was filed in the U.S. District Court for the Central District of California. The case will be decided by the court. The defendants in the case include OTA Franchise Corp, Newport Exchange Holdings, NEH Services, Inc., Eyal Shachar (also known as Eyal Shahar), Samuel Seiden, and Darren Kimoto. They are charged with violating the FTC Act and the Consumer Review Fairness Act.
According to an FTC press release, “OTA misrepresents that it has a patented “strategy” that anyone can use to generate substantial income from trading in the financial markets. OTA claims that its strategy is designed to generate income in any market, “whether it’s going up, down or sideways.” The company’s claims are often targeted at older consumers. Additionally, OTA “instructors”—salespeople on commission who market OTA’s training and strategy to consumers in live events across the county—often hold themselves out as successful traders who have amassed substantial wealth using OTA’s strategy.
However, OTA does not track the trading results of its customers, and the FTC alleges that OTA’s own surveys indicate that its customers are not making the type of income OTA advertises. Trading data from a platform used by OTA customers also suggest that the vast majority of OTA’s customers do not make any money, and many lose money on top of the money they pay OTA. Evidence obtained by the FTC also indicates that instructors’ claims of amassing wealth by using OTA’s strategy are false or unsubstantiated.”
OTA Fights Back
On February 4, 2020, Online Trading Academy filed a lawsuit to prevent the FTC from violating OTA’s First Amendment rights by confining commercial speech and from seeking relief against OTA to which the FTC is not entitled. Eyal Shachar, in a February 4, 2020 press release stated, “Since our founding in 1997, we have worked tirelessly on behalf of our more than 70,000 students to equip them with the education, tools and skills to trade with confidence, manage risk and make the markets more inclusive.”
Online Trading Academy is arguing on the constitutionally guaranteed right to commercial free speech, while the FTC is comes at a different angle on unfounded claims.
