Dan Murphy SEC: What it's like to deal with the SEC

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 ticket.


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 the site.

Here was my biggest problem: marketing myself. I think I was pretty insecure, so I would paint myself in the best light possible. Ah youth.

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 comb.

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 done.

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 even know.

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 platter.

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 possible situation.

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 facade.

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

~ Dan




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