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 TINA.org 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 TINA.org’s complaint letter
TINA.org 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—www.stansberryresearch.com—had violated FTC regulations, state laws, and a prior SEC court order.
After TINA.org’s complaint letter
TINA.org 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 TINA.org’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 TINA.org are not legally required—TINA.org 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, TINA.org 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 TINA.org. “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 TINA.org’s investigation:
1. Testimonials on the site omitted vital information
2. Atypical investment results
S&A testimonials implied unusually high ROR.
TINA.org used a ROR of 20% to make these calculations.
Though the vast majority of testimonials did not indicate the initial investment amount, TINA.org 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, TINA.org 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.
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. TINA.org disagreed.
3. Suspiciously similar results and quotes
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 TINA.org that it may have duplicated some testimonials.
4. Testimonials promoting retirement newsletter contain false or misleading information
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.”
Mark Arnold, Stansberry’s director of business development, when asked if the company had any additional comments about TINA.org’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 TINA.org’s investigation and Stansberry’s response can be found here.
Click here to review consumer complaints the FTC has received about Stansberry.
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.)
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,