Beware of the Blurb!
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Sometimes a book is judged by its cover, as the publisher of The Beardstown Ladies’ Common-Sense Investment Guide discovered when lawsuits on behalf of some 800,000 purchasers of that book were filed in both New York and California. The case offers a cautionary lesson in what can go wrong when a publisher is too enthusiastic in touting a book on its cover.
The Beardstown Ladies Investment Club came to the attention of the national media in the 1990s when the portfolio of these amateur investors outperformed even the hottest mutual funds and smartest professional money managers. The rate of return on their investments over a 10-year period was 23.4%–or so the ladies claimed.
The problem for the publisher began with the decision to put the impressive rate of return on the covers and jacket copy of the books in which the ladies shared their investment strategies. With more than a million copies in print, the series was a national best-seller for Hyperion Books, an imprint of the Walt Disney Company’s publishing division.
A reporter for a Chicago magazine challenged the claim, however, and an audit by the accounting firm of PricewaterhouseCoopers revealed that the actual rate of return was only 9.1%. The ladies ultimately conceded that the claim was simply wrong, the result of their own mistakes in toting up the numbers.
Cheryl Lacoff, an aggrieved buyer of The Beardstown Ladies’ Common-Sense Investment G…IBPA Members – Click here to view the full article (login required).
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