The Federal Court of Australia has found online publishing company Port Phillip Publishing (PPP) and its former director liable for misleading and deceptive statements contained within a paid-subscription e-guide and its associated marketing campaign.
The misleading statements made by PPP and Director Kristan Sayce related to an investment strategy targeting retired investors and investors approaching retirement, said to mimic the performance of the Australian Government’s Future Fund.
The two documents in which the misleading statements were made were published in September 2017 and entitled ‘Everyday Australians Now Legally ‘Piggybacking’ ‘the Future Fund’…and collecting extra monthly income injections of $540 right up to $6,667’ (Promo Letter) and ‘Your Quick Start Guide to Piggybacking the Future Fund’ (Guide).
PPP published the Promo Letter, promoting the Guide, on two of its websites and emailed copies of the Promo Letter to approximately 200,000 subscribers.
The Promo Letter and Guide promoted investing in a portfolio of specific listed investment companies and exchange traded funds which was said could mimic the performance of the Future Fund. The Future Fund is Australia’s sovereign wealth fund. It is not open to direct public investment.
PPP’s Guide could only be accessed if a person subscribed to a service called ‘Total Income’ and paid a subscription fee of $49. 823 people paid for a copy of the Guide.
The parties also submitted that representations contained in testimonials about the Promo Letter were false and misleading.
“If investors had adopted the investment strategy in PPP’s Guide, they were likely to have generated lower returns than the returns promoted in the Promo Letter and exposed investors to a greater level of risk than that adopted by the Future Fund in September 2017. ASIC seeks to promote confident and informed participation of investors and in this case, investors were misled,” said Australian Securities and Investment Commission (ASIC) Deputy Chair Daniel Crennan QC.
PPP and Sayce admitted that various statements contained in the Promo Letter and Guide, which related to the identity and expertise of the author, the extent of research conducted in relation to the investment strategy, and the income that could be generated from adopting the investment strategy were misleading, deceptive and false.
They further admitted that the Promo Letter and the Guide failed to disclose facts about the frequency of dividend returns and risks to which an investor might be exposed from adopting the investment strategy.
PPP and Sayce also relied on and misused client testimonials in the Promo Letter in that they failed to disclose that each client had never adopted the investment strategy.
PPP and Sayce reached an agreement with the ASIC on the facts to be considered by the Court, the resulting contraventions of the law, and penalties imposed as a result.
PPP was then fined $600,000, while Sayce was personally fined $50,000.
About Port Phillip Publishing
Established in 2005, PPP is an independent financial publisher based in Melbourne, providing financial commentary, economic analysis and market forecasts through print and digital publications, books and conferences.
Its website states “We think our investment ideas can help you become financially independent, better-informed and a more successful investor.”
“Our editorial team will help you make sense of the complex world of geopolitics and high finance – and identify ways you can profit from developments large and small so you can act – and potentially profit – right away and for many years to come.”
ASIC commenced proceedings against PPP and Sayce on 20 December 2018 (18-393MR).