Dan Murphy vs. SEC: Financialpicks.com
From Dan Murphy, personal trader:
So, what's it like dealing with the SEC? Well, it
kinda sucks...and I'm definitely under-exaggerating.
I remember it was early 2000, tech stocks were
exploding (and imploding) and everyone and their mother decided to quit their
jobs and become a full time trader.
I had started the website you're
on now (financialpicks.com) back in 1998. Quit my job, moved, and told myself
that I'd never work for anyone else again. I didn't like the corporate
bullshit...let alone wearing a tie. I still get shivers just thinking of it.
About the time I was feeling kinda smug about
things, I heard a knock on the door. A FedEx delivery person shoved this
envelope into my hand as soon as I opened the door.
Damn. It's from the SEC. Damn, it says I'm under
some sort of investigation and they want my business records.
My heart sunk. I was like holy shit, what in the
world do they want with me? The worst thing I had ever done was get a speeding
To this day in 2010, I have absolutely no
criminal record. I've never been arrested or been in any lawsuit, nothin'. Hope
I didn't spoil the ending for you...keep reading...it's kind of like watching a
train wreck in slow motion.
So I send them a bunch of crap they requested and when I got a
reply, they told me I was violating securities law with what was on my website.
What a Knucklehead
Knowing what I know now, I realize that at 24, I
didn't know jack shit about how the business world worked. I thought I could
show charts and stats, and paint myself in the best light possible. As long as I
didn't blatantly lie, everything would be peachy.
Like a dipshit, I talked about trading in the 80's
when I first was introduced to the wonders of stock trading. Well, this was a
class assignment as a kid, not actual trading. That's a big no no. That's just absolute crapola that can't be used to market yourself.
I was so green, I didn't even put up disclaimers.
I remember seeing them on other sites, but I had never bothered to add them to
Here was my biggest problem: marketing myself. I
think I was pretty insecure, so I would paint myself in the best light possible.
Take a Hike Kid
So I thought I was going to be sued or something,
so I tried to hire a securities lawyer.
"What did you do? How much do you make?
Haaaa! Take a hike kid."
Well apparently apparently I didn't make enough to
complete a one minute phone call. Glad he didn't bill me for it.
After that, I knew I was on my own. I remember
thinking "now what?"
What if I was banned from trading or advising or
both? I had really put a lot of time and effort into this little shindig I
called a business.
Time to Face the Man
So later that year, I had to give a deposition. If
you don't know what a deposition is, that's awesome! Seriously, it's super
stressful - you don't want to be in one. You are in a room surrounded by several lawyers and a court reporter
typing down your every syllable.
They're going over every detail with a fine-tooth
It's not like Matlock with crazy cross-examination
and all that TV crap, but they asked every possible question they could based on
the wording of the site.
I remember asking them if anyone had ever
complained about Financial Picks. Nope. The SEC was proactively enforcing.
Weird, but that's how it was
Not sure if that's still how it's done or if it
was a crazy crackdown thing since the Internet was pretty new in 2000.
What was weirder is that I think they were
training a new lawyer that day, so I felt even more like some kind of guinea
pig. But hey, I suppose I had only myself to blame.
After all was said and done, we shook hands and
went our separate ways. It was kind like the old cartoon with the fox and
sheepdog. "See ya later Ralph."
Oh yeah. I get back to my car and I've got a
parking ticket. Sweet.
If there's one thing that's universally true about
government, it's that they're slow. A full year after initial contact, they
finally gave me a cease and desist order.
Looking at their website, it was actually 18
months - right after 9/11. Guess they wanted to clean the books.
I had to put up disclaimers, and not put anything
on the site that could be remotely misleading.
No fines. No ban. The end.
Well at least my journey with the SEC ended. It
wasn't until a few years ago that I didn't get all jumpy and worked up when I
got a knock on the door.
I had an ex-girlfriend that had her house robbed,
and she had trouble sleeping there for months. I guess it was kind of like that
in the sense that it was traumatic.
I wasn't violated, but I sure felt like Big
Brother was flying helicopters outside my window.
10 Years Later
So what did I learn from that experience? First of
all, I learned that it's pretty freakin' easy to ruin your reputation. I was
immediately condemned as a dirt bag for life.
I got some nasty emails. Not from people who were
members, but from the types that just want to lash out at somebody they don't
To this day, I still get bunched with Bernie
Madoff types. People email me saying "ah-ha f*cker caught you. You're a douche
because I read so on the Internet."
Speaking of Bernie, my biggest gripe about the SEC is that they seem to go
after the little guys when good ol' Bernie was handed to the SEC on a silver
I suppose it's the easy thing to do. The little
guy can't even afford a lawyer...and by damn we should all know the securities
act of 1930.
It's stamped into my forearm.
I guess I could have just closed up shop and got a
9-5 job. Got back into the corporate game where there was a manual for every
I could have run away and not faced the music. A
new business was simply a domain name away. I could just hide behind a corporate
Here's what I did instead: I learned everything I
possibly could about how the markets worked. I wanted to show people that I did
know what the heck I was talking about.
Heck, Y2K was when I started to notice some truly
ground-breaking stuff...the beginning of my Smart Money indicator.
But that's a whole other story...here's what I
decided to do:
Instead of being shady with marketing
myself, I would earn the respect and gratitude and wealth that I always
wanted. In other words, I would do the hard work and walk the walk.
A decade later, I live in sunny Newport Beach. I
trade nearly everyday, and have been very successful in both my personal
trading and helping other traders learn how the market really works.
When it comes to trading, I've grown to know and
love the S&P 500 eminis and have made ground breaking research in the field.
As far as I know, no one else has ever developed a
method like my automated pattern recognition system (no, it's not some crap I'm
trying to sell). There is zero chance I'll be working for anyone else my entire
life (beside the tax man of course).
It was one hell of an experience, and I would
rather get a root canal than do it again, but I learned a great deal. Not only
about what not to do, but how to pick myself back up when all seems lost.
Challenges make life interesting, however,
overcoming them is what makes life meaningful.
- Mark Twain