Probe prompts financial publisher to change marketing

Stansberry & Associates removed hundreds of testimonials and posted a disclosure on its website that trading stocks is risky and that past performance is no guarantee of future results

The testimonials on the Stansberry & Associates Investment Research website were quite intriguing. The testimonials claimed that if you followed the investment tips in the company’s newsletters you could make $10,000 a month, bag a quick $20,000, or earn in excess of $300,000 in gains. Some newsletter subscribers who were quoted in the testimonials said they were sitting on a million dollars or more after following the company’s secrets to financial success. But an in-depth investigation found significant problems with the claims. All of the testimonials, almost half of which targeted the elderly or those planning for retirement, had omitted vital information, including the risks involved with investing money. Many of the testimonials did not appear to report results that are typical or achievable for the ordinary subscriber. And some contained blatant lies.

Before’s complaint letter took action, alerting Porter Stansberry (the founder of the company) in a letter March 11 that it had found that his company and its website——had violated FTC regulations, state laws, and a prior SEC court order.

After’s complaint letter requested the company within one week remove more than 200 deceptive testimonials from its website and promotional materials and clearly disclose on its website the risks of investing money or it would send complaints to federal and state regulators. The company complied by March 18, removing hundreds of testimonials and posting a disclosure on its website that trading stocks is risky and that past performance is no guarantee of future results. It also signaled it would incorporate the changes into future promotions and testimonials.

Though company officials maintain that the company’s advertising and testimonials were not deceptive, Porter Stansberry wrote in an emailed letter to’s legal director:

…it appears we may have made a few mistakes in the marketing materials on our websites. That’s extremely frustrating for me…We are going to fix these problems as soon as possible and take whatever actions are necessary to make sure this doesn’t happen again – including replacing staff where necessary.

Who is Stansberry?

The Baltimore-based Stansberry & Associates Investment Research is a private publishing company that sells 15 different newsletters focused primarily on giving investment and trading advice. It touts that it has nearly a million readers in 120 countries. The company has made headlines before when the SEC went after it in 2003 for fraud. As a result of the SEC’s lawsuit, the company, then called Pirate Investor, LLC, its parent company, and Porter Stansberry, were later ordered by a court to pay $1.5 million and to refrain from making any misleading or untrue statements, as well as from using any scheme to defraud the public.

Despite the company’s focus on providing investment advice, Stansberry is exempt from certain SEC regulations governing investment advisors because it is a “newsletter publisher,” rather than a firm that handles individual portfolios and provides one-on-one advice. For example, Stansberry is exempt from having to abide by the SEC’s complete ban on the use of testimonials, which the agency views as inherently misleading. While Stansberry fits within this loophole – and the company maintains the disclosures requested by are not legally required— maintains that the company is not exempt from federal and state laws governing false and misleading advertising, or from complying with the 2007 court order that prohibits the company from making misleading and untrue statements.

In investigating Stansberry, is calling attention to important information consumers should know about tactics sometimes used in the thriving newsletter industry, such as touting results not typically achievable and omitting crucial information.

“Stansberry did the right thing in acting quickly to remove the testimonials and post the disclosure about risks. It’s a good start,’’ said Bonnie Patten, executive director of “Stansberry isn’t the only company out there that has been deploying these kinds of sketchy practices. We will continue to pursue companies that we find are misleading consumers.”

Here are the findings of’s investigation:

1.     Testimonials on the site omitted vital information

  • None of the testimonials warned of the substantial risks of investing money, nor did the company clearly or prominently disclose such risks.
  • Of the 178 testimonials that referred to specific monetary gains, more than 90 percent did not provide enough information to calculate the rate of return on investment.
  • Less than 2 percent of the testimonials mentioned the month and year of when the claimed success occurred, thus depriving the consumer of knowing the market conditions at the time, and allowing the company to imply that testimonials based on old, stale advice were actually current testimonials based on current newsletter advice and current market conditions.

2.    Atypical investment results

  • Of the 16 testimonials that did provide a rate of return or some information to calculate a rate of return, all claimed to exceed the Standard & Poor’s (S&P) 500 Index average for the last ten years and the rate of return achieved by David Swensen, Yale’s chief investment officer, who grew the University’s endowment from just over $1 billion to almost $20 billion over 27 years. All but one claim to exceed Warren Buffett’s average rate of return of 19.7% from 1965 to 2012.

S&A testimonials implied unusually high ROR.

  • While the people quoted in the Stansberry testimonials included truck drivers, office workers, and even unemployed individuals who seemed to come from modest means, they shockingly seemed to be able to invest six–, seven–, and eight-figure amounts. used a ROR of 20% to make these calculations.

Though the vast majority of testimonials did not indicate the initial investment amount, made calculations using the limited information provided (i.e., the touted gain and the amount of time it took to get there) and a hypothetical, and quite generous, rate of return of 20 percent. In doing so, found that the smallest amount any of these subscribers would have had to invest was more than $64,000. More than half would have had to invest $500,000 or more and 21 percent would have had to invest more than $1 million. Five percent would have had to invest more than $10 million.

  • One testimonial even claimed that a 10-year-old child earned $100,000 per year following Stansberry newsletter advice.

Stansberry officials said that some of these testimonials, including the one from the child, came from newspaper articles and that it was clear to readers that the investors quoted were not Stansberry subscribers. disagreed.

3.    Suspiciously similar results and quotes

  • A number of different individuals quoted in testimonials claimed to have earned the same exact amount of money and use similar, if not identical, wording. Three different people, for example, all made “about $15,000 to date” and found a Stansberry tip to be the most “exciting” and “profitable” strategy in 20 years; two different people earned exactly $72,389; two earned exactly $15,460; and three “made over $13,000 in January.”

Stansberry officials said names of those quoted in testimonials were changed to protect their identities, though that wasn’t previously disclosed. The company has now disclosed that fact and admitted to that it may have duplicated some testimonials.

4.    Testimonials promoting retirement newsletter contain false or misleading information 

  • Several testimonials used to promote one of two retirement newsletters published by Stansberry – Retirement Millionaire – claimed that the newsletter gave them the secret to obtaining “free” silver from U.S. banks. However, learned that the silver was not free at all; consumers had to exchange their paper dollars for half dollars that contain silver — and those were ones only minted before 1971.

Stansberry officials said “free silver” isn’t false or misleading because it is in reference to “its value above the actual legal tender value of the half dollar.”

  • A testimonial in a Retirement Millionaire promotional video deceptively told consumers that the endorser was able to take a cruise at a fraction of the cost thanks to a Stansberry tip, but failed to mention that in order to get the discounted price, consumers had to work on the ship and have a specific skill to be hired to qualify for the discounted vacation.

Mark Arnold, Stansberry’s director of business development, when asked if the company had any additional comments about’s investigation or information for its readers said in an email:

I am proud of our organization and how we approach things. But, that does not mean that there isn’t room for improvement. If any past or current subscriber of ours is not satisfied with our products, we typically go above and beyond to make sure that person has a good experience with our company. If someone did not, I invite them to contact our customer service department by phone or email right away at [email protected] or 1-888-261-2693.  We will do our very best to make sure that they are treated well.

More information about’s investigation and Stansberry’s response can be found here.

Click here to review consumer complaints the FTC has received about Stansberry.



Cheaper potash due to rupee appreciation and cartel break-up!

Following the breakup of a JV between Uralkali and Belaruskarli, China managed to secure potash at $305 per tonne. India too followed the suit and clinched a deal at $322 per tonne from Uralkali for 8 lakh tonnes of potash

For the first nine months of fiscal year, 2013-14, covering April to January, India imported about 2.5 million tonnes of potash at $427 per tonne and the balance requirement of 600,000 tonnes was acquired by Coromandel Fertilisers $369 per tonne. A few months ago, it may be recalled that Belarus Potash Company (BPC), a joint venture marketing arm of Russian OAO Uralkali and Belarussian Belaruskarli cartel broke up, reason and details of which are still unknown to public. Uralkali is the world's largest potash producer. In January this year, they concluded a contract to supply 700,000 tonnes of potash to China $305 a tonne for supply during the first six months of 2014 (January to June), after having bought the previous lot at $400 a tonne!


Potash, being a soil nutrient, is regularly imported by Indian Potash Ltd, and India began to negotiate for a lower rate soon after this break-up. In fact, after knowing the Chinese rate, India was hoping to secure the order in the region of $320 to $325, which would bring about considerable saving in the cost considering the level of $427 paid earlier for supplies! Indian requirements, annually, are about 3.5 million tonnes.


Press reports indicate that Indian Potash Ltd has been successful in concluding a new contract for getting 800,000 tonnes of potash $322 a tonne from Uralkali. The fact that the rupee has appreciated in the last few days makes the deal sweeter and cheaper. It may be remembered that government gives a subsidy of Rs11,300 per tonne of muriate of potash, which is a widely used fertilizer that improves root strength and disease resistance of crops. Technically, this soil nutrient is also used in different ratios with other nutrients like nitrogen, phosphate, sulphur and zinc to make suitable fertiliser for various needs.


According to PS Gahalaut, managing director of Indian Potash, the retail price of muriate of potash is likely to remain unchanged at Rs16,000 per tonne "as rising costs and reduction in subsidy has offset the lower price" obtained.


The rate of subsidy may be revised once the new government takes over at the centre!


(AK Ramdas has worked with the Engineering Export Promotion Council of the ministry of commerce. He was also associated with various committees of the Council. His international career took him to places like Beirut, Kuwait and Dubai at a time when these were small trading outposts; and later to the US.)


Prithvi Info Solution founder’s assets auctioned to recover $17 million penalty

A Court in the US held Prithvi Information Solution and its associates guilty for $17 million fraud to Kyko Global Inc. On failure of payment, the Sheriff seized and auctioned personal assets of the company founder Madhavi Vuppalapati

Following directions from a US District Court to recover money, the Sheriff from King County auctioned personal assets of Madhavi Vuppalapati, founder of Prithvi Information Solutions Ltd to recover $17 million.

Canada based Kyko Global Inc had filed a fraud case against the Indian company in the Washington Court. In its petition, Kyko Global had alleged that Prithvi and its affiliates created fictitious, counterfeit customers to get an advance payment of $17 million from them.

In its Judgment on 6 September 2013, the Court said, “Judgment should be entered against Prithvi Information Solutions Ltd, Prithvi Information Solutions International LLC, Prithvi Catalytic Inc, Prithvi Solutions Inc, Madhavi Vuppalapati, DCGS Inc, Inalytix Inc, Avani Investments Inc, Ananya Capital Inc, EPP Inc, Financial Oxygen Inc, Huawei Latin American Solutions Inc and L3C Inc in the amount of $1,75,68,854 plus prejudgment interest accruing at the rate agreed to between the parties at 2.45% per month in the total amount of $7,96,776, as confessed to by the Defendants.”

However, Prithvi and its associates including Vuppalapati failed to pay $17 million along with penalty charges. This lead to the Sheriff auctioning personal assets like Lexus car, jewellery and household good belonging to Vuppalapati on 20 March 2014.

In November 2011, Kyko said it entered into an agreement with Prithvi for certain factoring services. As per their agreement, Prithvi had to identify certain of its customer account receivable for IT services and authorize direct payment to be made to Kyko. Prithvi Information Solutions offered account receivables of few major customers to Kyko. However, none of the customers Prithvi offered had any business relationship with it.

When Kyko tried to acknowledge that these clients will make payments directly to Kyko, they got verifications, but in reality, it was the associates of Prithvi that had posed as clients and created and executed the verifications. When Kyko requested Madhvi Vuppalapati to be put in touch directly with the representatives of the five clients, she turned down the request saying that it will be detrimental to their relationships with these clients.

Over a next two years, Vuppalapati and her associates continuously deceived the unsuspecting Kyko, in the process and kept them in the dark, Kyko alleged. Finally, while attempting to collect outstanding dues, Kyko came to know, through its own internal investigation that Prithvi had created fictitious customers to deceive Kyko and extract more monies from it.

In order to get money back, Kyko filed a lawsuit on 16 June 2013 against Prithvi Information Solutions at the US District Court. On 8 August 2013, Kyko moved the court for issuance of judgment in amount against defendants in pursuant to confession of judgment and the motion was granted by the court.

In September 2013, Kyko filed a Writ of Garnishment against Prithvi Information Solutions. Kyko claimed damages of $18,431,765.90 ($18.43 million) inclusive of balance of judgment, prejudgment  interest and interest of judgment from 9 June 2013 to 23 September 2013.

As Madhvi Vuppalapati failed to make the payment to Kyko, on 12 February 2014, the court sent notice directing sheriff to do auction and sell her personal assets including her Lexus car, jewellery and miscellaneous household items. The Sherif auctioned her assets on 20 March 2014.


Moneylife earlier wrote about scandalous saga of Prithvi Information Solution as it was involved in all kinds of financial manoeuvrings read; Prithvi Info Solutions: Why regulators are silent over the scandalous saga?

Read more stories about Prithvi Information Solution and its frauds here,

Prithvi’s recent acquisition despite multiple scandals and losses raises a stink

Scam: SEBI Finally Wakes Up

Prithvi: No Disclosures

No Questions Asked






Dayananda Kamath k

3 years ago

on listing there was huge rigging in the price of the share of this company. but our regulators slept. it may be the reason for indian companies being caught in foriegn lands. they become habitual to do business in illegal way and get courage to hoodwink the authorities in india and suceed and adopt the same process there. here even if you complaint they are least bothered to initiate action. action is also initiated to satisfy some vested interests.


shadi katyal

In Reply to Dayananda Kamath k 3 years ago

We carry our baggage to foreign land with the idea that we are immune as were in India to any Law. After what is Law in India??
There are Laws on the books but for whom.? It is mind set that if they got away in India why not in USA. Most of these companies are honest but those like this did not come to do business but to collect as much money as possible.
They have no loyalty to India or USA but money and thus morals donot play any role.
After all look at all the SCAMS in Bombay stock exchange.
Only way such firms with such mentality can learn to spend few years in a jail before deported.

Dayananda Kamath k

In Reply to shadi katyal 3 years ago

may be that isthe reason rahul gandhi is interested in brining more rights through law than action. so that you have to litigate upto supreme court at huge cost and time to enforce these rights. which ordinary people can not afford.

R Balakrishnan

3 years ago

I recall an aggressive investment banker who was hand in glove with the promoter- helped to sell the issue, helped him with Promoter funding for shares-- then apparently they split the proceeds after the lending co wrote off the loan!!

R Balakrishnan

3 years ago

Just ignoring cos from this city helps you save money. Wonder if SEBI has anything to say to the India listed company..

shadi katyal

3 years ago

It is a shame that so many NRI families have suffered due to such greed and lack of any ethics.
What is if GOI is going to take any action for giving such black mark to the nation

Guy Fawkes

3 years ago

I worked for Mrs. Vuppalapati in the United States for her highest-performing subsidiary. Her criminal and fraudulent behaviors have put the careers and livelihoods of hundreds in jeopardy.

I cannot express how gleefully joyous I was to discover this article, and the fact that her personal assets have been seized. I can only hope that this action followed an arrest by the King County Sheriff's department, as she deserves to be in jail

shadi katyal

3 years ago

There are many such companies who are successful but many others have shown similar corrupt practices and blame lies mainly on our greed and baggage we bring along from our culture.
Why have we failed to understand that world is very different when it comes to hard work, ethics Law and Order. We are giving a black eye to our nation. Yes we might not be alone but number of cases against our people high and low are more than others WHY????

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