Porter Stansberry scam was one of the widely celebrated scams. The judicial litigation that characterized the incident represented a big landmark in the nation's judiciary as well as the financial sector.
Up till these days, the scars left by this gruesome financial scam continue to haunt others in the stock exchange investment business like a ghost.
Frank Porter Stansberry is an investment analyst and founder of Stansberry & Associates Investment Research, a private publishing company based in Baltimore, Maryland. The company was founded in 1999.
He is also the editor of two of Agora's Internet financial newsletters namely Porter Stansberry's Investment Advisory and PirateInvestor.com which publish monthly newsletter called Stansbery's Investment Advisory. The newsletter deals with safe value investments poised to give subscribers years of exceptional returns. Porter Stansberry and his company were hit with $1.5 million in financial penalties over a securities scam which was widely known as Porter Stansberry scam.
Stansberry and Pirate Investor LLC (renamed Stansberry & Ass. Investment Research LLC in 2005,) is a subsidiary of Agora, Inc., a Maryland-based corporation that publishes books, magazines and monthly newsletters.
The company operates at least 15 financial web sites in both the United States and Europe. It's publications include The Cutting Edge, Penny Stock Advisory, Fleet Street Letter, The Red Zone, The Flying V Lockup Trader, Taipan, Rogue Trader, CSX Trader, Options Hotline, Outstanding Investments, Richebacher Letter, Daily Reckoning Investment Advisory, Carpathia Letter, Contrarian Speculator, Jim Davidson's Vantage Point Investing, and the Strategic Opportunities. Going by company's own records, these publications have well over 21,500 paid subscribers worldwide.
Potter Stansberry scam started when SEC accused and sued Porter Stansberry and Pirate Investor at the United States District Court for the District of Maryland with a Civil Action No. MJG-03-1042; filed 08/03/2007). SEC had accused the duo of fraud concerning a “Special Report” authored by Stansberry, using the pseudonym ‘Jay McDaniel', about publicly-listed uranium enrichment services provider USEC, Inc. and a promotional “Super Insider Tip Email” offering the Special Report for sale that was distributed on May 14, 2002, after which Pirate Investor sold 1,217 reports for $1,000 each.
SEC alleged that a lot of predictive statements were meant to deceive with a purpose to systematically extort money from unsuspecting populace. The court agreed with SEC that the Super Insider Solicitation and the Special Report contain numerous statements that were untrue and misrepresented.
The judge averred it was actually a deliberate attempt to mislead for some material gain. At the completion of a 28-month bench trial, the District Court convicted the defendants of committing the stock fraud.
However, this sentence of the District Court was later appealed by publisher and the company as a First Amendment issue. But in 2009, the judgment, maximum fines, and injunctions levied by the lower court were upheld by the United States Court of Appeals for the 4th District.
The Appellate Court's judgment was further appealed by the defendants but the appeal was grossly rejected by the U.S. Supreme Court in June 2010 when the federal judge determined that Porter Stansberry and Pirate Investor LLC actually defrauded their own subscribers in a securities scam. The highest court convicted Porter Stansberry and Private Investor and fined them a sum $1.5 million for securities fraud. This actually confirmed the reality of Porter Stansberry scam.