Thu 6 March 08 · Filed under Pyramid Schemes & MLM
An article in the Salt Lake Tribune about Barry Minkow’s huge court victory over Usana Health Sciences (NASDAQ:USNA) attributed the following statements to the company:
But Usana said the parts of the lawsuit it considers the most important remain. Those include its ability to identify and sue institutional investors, hedge funds and individual investors it says conspired with Minkow to profit from the company’s falling stock. It also can still seek an injunction prohibiting Minkow from providing false information that hurts the company.
Newsflash! Usana has had the “ability” to “identify” and “sue” these parties that they lists all along. Why haven’t they? Because there is no conspiracy, and Usana has no proof of wrongdoing on the part of anyone. We are almost year into the fight, and all that Usana has is a statement that they could sue people?
I think this really shows how devastating the court ruling was and how thin the company’s case is against Barry Minkow and Fraud Discovery Institute. They have no case.
I love what Barry had to say:
“The message from this case is if you have accurate information and you don’t break the law and you can corroborate your findings, you don’t have to fear retribution from the company,” Minkow said in an interview.
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Even if I didn’t believe that these MLM “opportunities” were really pyramid scams, I’d still never invest in a company whose management seems to care more about their stock price, then in increasing their earnings. Innuendo can only go so far and if Minkow is wrong, then Usana’s business performance should be more than enough to speak for itself. Instead, Usana launches a distracting lawsuit attacking Minkow’s right to free speech. To top it off, they then go on to waste more money by running advertisements for their company on CNBC, instead of my appropriate platforms for their products. I can’t speak for everyone, but I somehow doubt that there are a lot of people on Wall Street who are interested in buying overpriced supplements. If Usana was targeting their ads to stay at home housewives watching soap operas, I could see how they might be tricked into buying supplements or trying to create a stay at home business, but to advertise on CNBC suggests that they care more about boosting their stock price, then in increasing sales. It’s easy to attack Usana for these types of practices, but I think that the financial press has a responsibility in all of this as well. For CNBC to continue to take money in exchange for pumping up questionable stocks is a fraud that the mainstream media refuses to address. I think they have a greater responsibility to their viewers and whether its Connect a jet or Usana, they should at least be doing a little research on their partners before running an ad on their network.
You aren’t seriously saying that companies should be investigating those who are advertising with them? How on earthy would they ever make money? The claims made are the responsibility of the advertiser, not the company advertising. There are douchebags running Google ads on my sidebar.. how could I possibly vet them all? Simple economics would make it cost prohibitive.
Although I must add that I agree with almost everything else you said. Advertising on CNBC is dumb. Wasting money on suing Barry is dumb. But what does that say about management at Usana?
I think that every publication has their own unique relationship with their viewers/readers and has to make their own decisions about what is appropriate. This may mean that they have to turn money away, but no matter how much a company like Usana wanted to pay me, I’d never considering putting their company in front of my own readers.
When it comes to Google adsense I tend to cut them more slack because their program is designed to match up small publications with small companies. I can understand how this would be overwhelming to screen and think that most web users view Google keyword ads with the appropriate skepticism. I will point out though, that you’d make more money not less, if your ads were more relevant to your viewers actual interests. It might take more work to find legitimate companies to partner with, but the way your Google ads show up now, I’d never click on a website whose domain is consumer-fraud-lawyer.com On the other hand, if you had a link to an attorney who you had heard good things about, your “blessing” on the ad would be enough to make me consider them if I needed one.
When it comes to CNBC though, its a different ballgame. It would be a lot easier for them to research their ads. They know that people are watching their programming to find out information on the market and presenting reliable information, whether reporting or advertising, is a moral responsibility that they have to their viewers.
I’m not suggesting that they need to do extensive due diligence, but if a pink sheet or bulletin board company wants to advertise their stock, then CNBC should at least do 15 minutes worth of searching to make sure that things are on the up and up. Even after the SEC had suspended CAJT from trading, CNBC still continued to run their ads on the network. Had you invested in the stock at the time, you’d be down 99.5% by now. Six months before that I saw them running an ad for a Canadian gold company who didn’t actually own any mines (whoops). After the dump the company is down 70%. Six months before that, they were running an add for a pink sheet stock whose CEO was actually found guilty of securities fraud and was awaiting sentencing while someone mysteriously unloaded shares on the CNBC public.
It’s easy to put the responsibility on the advertiser, but how is putting an ad for a penny stock on CNBC all that different from paying someone to spam? Both have the same effect. If it was a one time thing, it’d be easy to overlook, but when so many of these stock promotions turn out to be fraud, you would think that CNBC would create minimal policies to help protect investors.
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