March 21, 2022
What Raging Bull customers need to know about the FTC’s misdirected case and its mischaracterization of the FTC settlement.
In an unprecedented action, the stock education firm, Raging Bull, successfully fought back against the Federal Trade Commission (FTC) in its misguided efforts to destroy the company. In the words of the presiding judge, the FTC’s actions “put handcuffs behind Raging Bull’s back and allowed [the] FTC to step on their throat for two years” (Preliminary Injunction Hearing, p. 23, March 19, 2021). Especially noteworthy, the FTC’s case relied wholly on a purported expert who did not understand trading and grossly misstated the trading performance of the company’s top educators, and, without any data on Raging Bull’s consumer demographics, painted the company as targeting vulnerable individuals, including immigrants and retirees. This was never substantiated, although the FTC still states that as fact despite having to backtrack on that allegation before the Court.
After the Preliminary Injunction Hearing (March 19, 2021) the FTC’s request for a Preliminary Injunction (which, had it been granted, would have resulted in a total shutdown of Raging Bull) was denied by the Court. At that point, Raging Bull faced a fundamental question — whether to continue fighting the FTC’s efforts to vindicate its preliminary loss, with the FTC’s unlimited government litigation funds, or to instead direct its efforts and resources to continuing to serve its loyal customers by settling the FTC’s meritless complaint. Raging Bull chose the latter, resulting in a negotiated settlement — without any admission of liability — for about 2% of the amount that the FTC had first sought. Not a victory for the FTC — despite the FTC’s March 8th, 2022, press release — but, in effect, a total vindication for Raging Bull.
We invite you to see below for a summary of the main points of this case and how the events of the 15-month process unfolded for us:
- The FTC case against Raging Bull was brought with no — ZERO — pre-complaint inquiry or investigation directed at Raging Bull. The first moment Raging Bull knew about the FTC lawsuit was when the FTC made their “emergency” filing in court on December 7, 2020. And the Court acted initially the very next day — in an action that the Court later reversed — without giving Raging Bull ANY opportunity to address either the law or facts alleged by the FTC.
- Raging Bull over the years had in place advertising and marketing practices that conformed with what dozens of its competitors were — and in many cases still are — doing. The suit that the FTC filed against Raging Bull had less to do with Raging Bull’s individual practices and more to do with the FTC trying to “send a message” to the marketplace.
- In the face of the FTC’s unfounded suit, Raging Bull chose to fight — rather than accede to the FTC’s misdirected enforcement. Raging Bull rebutted every core allegation made by the FTC in its lawsuit with documents and other evidence, including company testimony, of the type the FTC never even asked for before it unleashed its “shoot first … and ask questions later” lawsuit against Raging Bull. The FTC’s core allegations were also rebutted fully by industry and academic experts, costing Raging Bull many hundreds of thousands of dollars in litigation expenses, to substantiate the fundamental point that Raging Bull had not conducted itself in a deceptive manner nor harmed its customers.
- Once Raging Bull got its day in court, Judge George Russell III, the presiding federal district court judge, after careful consideration of all of the relevant facts, took the near-unprecedented action of denying the FTC the preliminary relief that the FTC had sought — preliminary relief that otherwise would have, in effect, forced Raging Bull to shut down its operations. Instead, the court required Raging Bull to operate under a detailed business plan and the careful oversight of a court-appointed compliance monitor, in addition to requiring Raging Bull’s principals to put up significant personal funds to re-capitalize the operations of Raging Bull.
- Approximately a month after Judge Russell III denied the FTC’s motion for preliminary relief, the U.S. Supreme Court rejected in a unanimous decision the core legal basis of the FTC’s lawsuit against Raging Bull — section 13b of the FTC Act — under which the FTC tried to put Raging Bull out of business through an asset freeze and receivership. Although much damage to Raging Bull by the FTC was already done by that point, that decision had the further effect of validating Raging Bull and its principals in the rightness of their cause against the FTC. As a result of Judge Russell’s decision denying the FTC the preliminary relief it sought, Raging Bull resumed its operations over the past year. During that time, Raging Bull has operated in full compliance with both the law as well as the conditions that the court outlined in its March 2021 order rejecting the FTC’s request for preliminary relief.
- Since then, Raging Bull has faced a fundamental question — whether to continue fighting the FTC’s efforts to vindicate its preliminary loss, with the FTC’s unlimited government litigation funds, or to move on through some sort of settlement of the FTC’s complaint and to instead direct its efforts and resources to continuing to serve its loyal customers. Raging Bull chose the latter, and those discussions eventually resulted in a negotiated settlement — without any admission of liability — on a theory of liability mostly unrelated to the FTC’s core allegations for a fraction (about 2%) of the amount that the FTC had first sought in its misguided suit. By no means is it a victory for the FTC but, reading between the lines, it is a total vindication for Raging Bull in terms of the baseless allegations the FTC had made in its lawsuit against Raging Bull.
Thank you for taking the time to read and understand our story. Raging Bull is committed to rebuilding its business and regaining the trust that was lost as a result of the FTC’s misguided case. Raging Bull thanks its thousands of loyal customers who stood by us during this fight, as well as our loyal employees, local communities, and legal team at Greenberg Traurig who took the time to successfully advocate for us in this litigation.
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