Newsletter Editor Settles SEC Fraud Charges

Scott Simon Fraser of Del Mar, Calif., editor of the Natural Contrarian Financial Newsletter, settled fraud charges with the Securities and Exchange Commission over “false and misleading” advertising claims, the agency said Thursday.

Fraser agreed to a cease-and-desist order without admitting or denying guilt, said Lisa A. Gok, assistant regional SEC director in Los Angeles.

The SEC found that Fraser made false claims about his newsletter’s returns in mailers and e-mail spam he sent prospective customers from August to November 2001. The ads said that the average stock he recommended rose 135% during a 28-month period and that more than 1,170 of his subscribers had become multimillionaires.

In fact, his newsletter’s picks gained 2.1% on average in 2000 and lost 12.1% in 2001, and in testimony before SEC staff he couldn’t name one multimillionaire subscriber, Gok said.

Fraser’s attorney, Michael Quinn, said his client got “an excellent result,” with no fines or penalties. He said Fraser was referring to a single stock rather than a portfolio average when he claimed a 135% gain, but he confirmed that Fraser did not name any multimillionaires.

Quinn also said the SEC found no falsehoods within the newsletter -- only in ads.

Mark Hulbert, editor of the Hulbert Financial Digest, which tracks investment newsletters, said Fraser this month claimed in new materials to be Hulbert’s “top-rated investment editor” for 2002. But Hulbert said that by his calculation, the Natural Contrarian’s average pick lost 13.6% from Jan. 1 through Nov. 30, 2002.

Quinn said he was unfamiliar with Hulbert’s assertions and could not comment.

Fraser’s newsletter was discontinued in December, but the Natural Contrarian has resurfaced as a stock-promoting vehicle, which Fraser discloses.

Josh Friedman