MUST READ!!!!!!!!!!!!!
This means that SWARM is total BS.
>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>
Despite repeated promises throughout April, May, and June that SWARM was
being developed and was nearly finalized, Groves never finalized SWARM for Spooz.
38. In approximately June of 2007, Groves indicated that he would need to “beta test”
the SWARM product at a third-party facility.
39. Spooz continued to pay Groves his salary, and provided Groves with a trading
account of $25,000 in order to facilitate beta testing of the SWARM product.
40. Rather than using the trading account Spooz provided, Groves indicated he was
going to use the account of James Pearce, a third party, to perform beta testing.
41. Mr. Pearce later acknowledged that Groves represented to him that Spooz was his
company and that Groves had the permission of his “partners” to engage in trading. Groves also
asserted to Mr. Pearce that Groves owned the Spooz software, trading systems, Trade Secrets
and Patent Rights.
Case 1:07-cv-07265 Document 1 Filed 12/27/2007 Page 7 of 16
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42. Spooz management agreed to the testing through the Pierce account with the
condition that the Spooz trading account, set up specifically for beta testing SWARM, also be
used in trading. On information and belief, Groves never traded under the Spooz account, as
Spooz requested.
43. After being pressed for results of the beta testing of SWARM, Groves provided a
written statement of the results to Spooz but insisted that he could not produce actual statements
due to “confidentiality.” Groves also represented to Spooz that, while he could itemize every
trade he executed, Pearce had, unbeknownst to Groves, entered irresponsible trades in the
account and had “blown the account up” on three separate occasions. Pearce has since stated that
Groves was the only individual to execute trades for Pearce’s sub-account.
44. Groves indicated in his written statement that:
All trading occurred in the account of Jim Pearce. The beta test period began July 2,
2007 and continued through July 18, 2007. For the beta period, only two spreads in the
energy complex were traded. The following unaudited results were generated from
account statements:
Trading Days: 12
Number of Trades: 244
Average Trades per Day: 20.3
Number of Winners: 234
Number of Losers: 5
Number of Scratches*: 5
Winning Percentage: 95.9 %
Losing Percentage: 2.05 %
Scratch Percentage: 2.05%
Average Winning Trade: ** $30
Average Losing Trade: ** $16
*A scratch is a trade initiated and offset at the same price. Transaction fee apply.
** Based upon one contract; excluding commissions and fees
Case 1:07-cv-07265 Document 1 Filed 12/27/2007 Page 8 of 16
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45. Based on Groves’ representations and prior approval, Spooz issued a press release
disclosing the record. Spooz also used these results to inform potential clients and investors of
Spooz’s success.
46. Groves’ representations were falsified, as Spooz later discovered.
47. In fact, Groves’ trading resulted in a $9,111.08 debit, rather than a winning
percentage as represented by Groves.
