According to an article on The Baltimore Sun's on-line service, Editor Frank Porter Stansberry's unsolicited e-mail read, "DOUBLE YOUR MONEY ON MAY 22 WITH THIS 'SUPER INSIDER' TIP." It added, "This could be the simplest, safest and easiest way you'll ever double or even triple your money. Ever."
The e-mail then gave information about an unnamed company that was due to be awarded a lucrative contract once government approval was granted. According to the e-mail the date of the announcement of the award was to be the 22nd May 2002 – and, for the sum of $1,000, the sender promised to reveal the name of the company.
Around 1,200 people paid their money and were told that the hot tip was in United States Enrichment Corp. (USEC), which sells enriched uranium to nuclear power stations. A new pricing agreement between USEC and a Russian company was due to be approved at a summit meeting between the US and Russia on the 22nd May.
Unfortunately the information was incorrect on the timing, and the announcement of the deal did not take place until five weeks later, by which time those who had purchased shares in USEC had actually lost money (albeit the share price jumped briefly when 1,200 hopefuls invested their savings).
The SEC complaint against Agora, its subsidiary Pirate Investor, LLC and Stansberry alleges that the defendants violated the anti-fraud provisions of federal securities laws. The complaint also seeks disgorgement and civil money penalties from all three defendants. The case does not allege actual insider trading.
Interest in the case has been raised because the defendants themselves have no financial holding in USEC, and the SEC has never before raised an action in these circumstances.
According to the New York Times, the defendants are relying on their right to free speech to defend the action, arguing that to allow the case:
"would expose newspapers, broadcasts, newsletters, web sites and every other form of communication about investment opportunities to the chill of civil liability under the nation's securities laws for the publication of any allegedly false statement."