Newsletters: Let the Subscriber Beware

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In 1978 Christopher Lowe, a New Jersey investment adviser, pleaded guilty to grand larceny after writing a series of bad checks. That was just one of four such brushes he had with the law, which, in the eyes of the Securities and Exchange Commission, made him unfit to publish the Lowe Investment & Financial Letter. The SEC in 1981 revoked Lowe's registration as an investment adviser and went to court to stop publication of his newsletter. Undeterred, Lowe kept publishing.

After four years of legal wrangling, the U.S. Supreme Court settled the issue last week, ruling in favor of Lowe by a vote of 8 to 0. The court said that the 1940 law requiring investment advisers to be registered by the SEC was not intended to apply to those who merely publish tips. The decision will shackle the SEC in its efforts to regulate financial newsletters, which are proliferating as fast as takeover bids on Wall Street. Many news organizations, which thought the SEC was tampering with freedom of the press, supported the ruling.

Lowe's business has flourished despite his battle with the SEC. During the dispute, he says, the number of subscribers to his newsletter nearly doubled, to about 9,600.