After hard-hitting Reuters article about AdvisorHUB, the online publication responds, like a sphinx
The gossip and news start-up takes issue with tone, taste and who called whom but also oozes gratitude
Brooke’s Note: It is no exaggeration to say that Andrew Parish and his crew at AdvisorHUB play the jagged edge of reporting rumors. It is sort of extreme advisor blogging. Whether it is a good way to go and 'advisor-centric’ is open to question. But the questions raised by Reuters about AdvisorHUB’s end game in terms of making money for its investors seem worthy of close watching. A newspaper is built on trust, and even in our sell-your-users-data-down-the-river culture [with Google and Facebook as culprits] that we live in, AdvisorHUB seems to have been pushing the envelope.
AdvisorHUB issued a response to Reuters saying it “disagrees” with an article written about it.
The investigative piece written by a number of Thomson Reuters reporters alleges the New York and Columbus, Ohio-based online gossip and news publication collected data about what brokers read on the site. The article says that AdvisorHUB then tried to sell that information to major brokerage firms including Morgan Stanley, Merrill Lynch and UBS.
“We disagree with both the tone and the specifics in the Reuters article,” writes founder and chief, Andrew Parish, founder and chief, of AdvisorHUB.
The key specific of the article was an allegation made by anonymous Reuters sources that AdvisorHUB, which positions itself as the champion of advisors against the big corporations they work for, was trying to turn around and sell data related to their reader habits right back to the corporations. For example, it could be used by Wall Street brokerage executives to find out whether a broker was looking for another job, Reuters wrote.
AdvisorHUB’s response, written by Parish and posted on the firm’s website, says that the publication was lured into conversations with “multiple firms” over a two-month period with the idea of sharing data. That statement was issued in press release form on Dec. 19.
AdvisorHUB unilaterally determined after each meeting that the brokerage executives with whom they met would not have follow-on conversations.
“We were approached by multiple firms in March and April of 2014 to share data,” Parish writes. “Let me say that again: the firms approached us about data and analytics. We had initial meetings with multiple firms and ended the conversations after the first meeting in each case. We were uncomfortable with the direction that those conversations were headed and believed that they were outside of the scope of our advisor centric philosophy and corporate principles.”
A call left on the AdvisorHUB voicemail in New York went unreturned on Friday.
Multitude of meetings
Parish declined to say in the written response what direction the brokerage execs took the conversations.
The Reuters piece alleges that “the direction” was most mostly toward money and that was dictated by AdvisorHUB.
“In interviews with Reuters, Parish, 40, confirmed he had offered to sell the data.” it says. “None agreed to buy, [Parish] said. He didn’t rule out trying to sell the data again in the future and plans to launch a section on the site with some of the analytics about overall usage.”
Parish did not say why he agreed to the multitude of meetings but allowed that he was star struck by who was inviting him.
“When you’re getting these phone calls from these global financial firms and you’re a small website, for us it was like, 'Whoa!’” he said to Reuters.
UBS and Morgan Stanley told Reuters, the new service writes, that they reached out to Parish to find out about his data-selling service. Reuters also cites “several sources at Merrill” who allowed that representatives of their firm reached out to Parish but only after hearing he was meeting with the competition.
The Reuters article says that its confidential sources who attended those meetings and a review of his presentation, told them that Parish offered to sell the information for as much as $120,000 a month. For that fee, the information was tailored by a scoring system that “rated data from 1 to 10 – based on what brokers were reading on AdvisorHUB — with claims it could predict advisers’ moves, according to the sources and his marketing materials.”
Parish, Reuters says, also offered to give “consideration” to coverage for any firm that bought the service. The sources of this information said they understood that “consideration” was code for favorable treatment in AdvisorHUB articles.
Reuters adds that Parish, 40, admitted he had offered to sell the data and that none of them took him up on his offer. AdvisorHUB didn’t rule out selling data at some point in the future, according to Reuters.
The wording in the AdvisorHUB response is indeed equivocal — covering only the present and the past.
“We DO NOT sell advisor information to any wealth management organization….Those conversations ended in July, 2014. They have never been revisited.”
'Cheap and debased’
AdvisorHUB launched as a subscription-based app on Jan. 21 after five investors, including Parish, funded it with $250,000 of startup capital. When subscriptions failed to flow in sufficient numbers, the subscription was dropped and a section called “rumors” was added.
Reuters wrote of Parish that he was fired by Edward D. Jones & Co in 1998 and suspended in 2001 by the NYSE, for admitting to making 20 unauthorized trades in two clients’ accounts. He later became a recruiter in his own practice, Axiom Consulting, and UBS was a major client. Parish sold Axiom to partners in March, according to the Reuters article.
Parish says that Reuters hit below the belt in providing that information about him.
“I am personally disappointed that Reuters chose to print information about my family and personal life,” Parish writes. “It comes off as cheap and debased, characteristics I would not normally attribute to Reuters … Issues in my personal and working life are well known and a matter of public record, from FINRA filings to divorce, and should have no bearing on an article written about AdvisorHUB and its popularity with financial advisors.”
“We are also disappointed that Reuters interviewed numerous people that provided positive comments, yet were never mentioned in the article.”
Despite his “disappointment,” Parish writes his first emotion regarding the article was one of gratitude to the organization for recognizing AdvisorHUB.
“First and foremost we’d like to thank Reuters for taking the time to recognize our organization and its place in the daily discussion within wealth management. It is an honor to have come to the point where our work is relevant and of significant interest to advisors and the institutions that employ them.”
At the end of Parish’s response to Reuters’s article, he again thanks Reuters.
“Finally, we’d like to thank Reuters again for recognizing our work and spending the time that they did on the article. The attention will serve to increase our audience and allow the advisor voice to be heard by more financial services professionals.”
Parish tells Reuters that his firm is already awash in readers with 200,000 registered users 500,000 hits per month.
Former business owner pleads guilty in federal court
Caitlin Turner, firstname.lastname@example.org
May 5, 2015
CHILLICOTHE – A local man could face up to five years in prison and a fine of $250,000 if found guilty of failing to pay over employment taxes to the Internal Revenue Service.
According to the IRS, Andrew J. Parish, 40, of Chillicothe, pleaded guilty to the count before Judge Terence Kemp of the U.S. Southern Ohio District Court.
Parish is alleged to have defrauded the IRS by failing to account for and pay over employment taxes between Jan. 2009 and March 2009, according to court documents. Parish was the owner and operator of Axiom Consulting Group, and was responsible for collecting, accounting for and paying the employment taxes to the IRS from Axiom employees.
Parish retained the services of an accounting firm that employed Certified Professional Accountants. One of the firm’s responsibilities was to process the payroll for Axiom based on figures provided to them by Parish along with preparing the employer’s quarterly federal tax returns.
According to the IRS, Parish did not follow payroll procedures and paid a majority of Axiom’s payroll by issuing the checks himself to Axiom employees. However, the amount of employment taxes that Parish withheld from his employees were never remitted to the IRS. Parish is also alleged to not have provided the true amount of the wages paid to the employees of the accounting firm.
The total tax loss to the IRS as a result of the non-payment of employment taxes was $341,336.46.
Parish was released on bond pending sentencing. A date for sentencing has not been sent.
“Business owners have a significant responsibility to collect and turn over all IRS withholding taxes,” Kathy Enstrom, Special Agent in Charges with the IRS Criminal Investigation unit of the Cincinnati Office, said. “Those who fail to do so gain a competitive advantage that will not be tolerated and will be prosecuted to the fullest extent of the law.”