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Russell Sands: A TurtleTrader Trained by Richard Dennis

Russell Sands lasted one year as a Turtle before leaving for reasons that aren’t completely clear. While he said that he resigned, other Turtles said he was “let go.” However, that detail was minor in view of Sands’s true Turtle legacy: selling Dennis’s famous rules. The selling of Dennis’s rules followed shortly after Sands’s departure from Chesapeake Capital (the firm he’d created with Jerry Parker). Sands was always honest about why Parker carried more weight in their former firm (“he had the longer and more valid track record”), but at the same time tension was brewing. For a while they had a close relationship. Every day they were at each other’s house. However, Parker soon bought Sands out.

What was Sands’s version of the buyout? “Jerry got greedy.” In all fairness, many hardworking people who make millions are called greedy. Sands could have just as easily been called jealous. Sands had an explanation for why trading had not gone his way after parting with Parker: “Paul Saunders and Kevin Brandt [Kidder Peabody/James River Capital Principles] came to me and said, ‘Russell, why don’t you start your own company? We’ll give you some money and let Jerry have Chesapeake.’ I said fine. This was right after the first Gulf War, when there had been some huge moves in the oil markets.” Kidder Peabody gave Sands money to trade, but the markets did not produce good trends over the next six to nine months. Sands said his trading performance went down to around 25 percent. His clients all ran for the doors. He sounded boxed in explaining his predicament: “Now, I’m basically out of business and don’t know what to do next.”

In August 1992, a few days after Hurricane Andrew had rocked south Florida, Sands rocked the Turtles’ carefully crafted secrecy. The Chicago Tribune blasted the story: A disciple of Richard J. Dennis, the world-famous Chicago futures trader, is offering to reveal the master’s trading secrets to the public for the first time . . . promising to tell all at seminars across the country, including one this weekend in Chicago, for an admission fee of $2,500 a person. Maybe Sands selling Dennis’s rules would have been no big deal in a normal situation, but the secrecy in the Turtles’ world was intense. Mike Shannon laughed at the situation in hindsight: “If we were having this interview and it was 1986 or 1987, we wouldn’t be talking. We were very guarded about the whole thing and we were intensely proud of what we were back in the day. We felt that there was something really incredibly special going on, that we were part of a special and experimental project. The secrecy alone was just off the charts. We weren’t allowed to discuss it according to Richard or anybody that worked for him.” However, Jim DiMaria downplayed the need for even signing an agreement: “It was pretty obvious to me that this stuff should be kept secret . . . the stuff we were taught was their stuff. I was lucky enough that they shared it with me. I didn’t feel like sharing it with anyone else.”

DiMaria’s response was typical of how most Turtles felt toward Dennis. After all, the Turtle experiment was all about making big-time money, and sharing rules for making millions made no sense. So not knowing what the impact of Sands’s actions would be, the other Turtles attempted to minimize the importance of Dennis’s rules. They wanted the world to know that the rules alone weren’t the secret to riches (true point). As a counterstrike, Sands argued that it was a good business opportunity: “I didn’t do anything illegal. I didn’t even do anything immoral. I tell people, ‘Whatever I say is what Richard Dennis said twenty years ago.’ I give him all the credit in the world for it. I didn’t come up with these ideas. I’m just passing it on. That’s the way it is.” Fifteen years before he was the arguable billionaire he is today, Jerry Parker reacted with outrage against his former partner: “I don’t think Russell has anything to say that’s worth $2,500.”

Given that Sands and Parker had been co-workers and friends at one time, his comment was a ninety-five-mile-per-hour fastball at Sands’s head. Liz Cheval then played the “Sands only learned so much” card, saying that it took her about two years to fully grasp and then use Dennis’s rules. Other Turtles said that since Sands was terminated from the program after one year, he did not get the “real” system. Right. Parker and Sands had worked in the same house every day. At that time, Sands knew what Parker knew about the Turtle trading rules. Both shared the same basic knowledge back then. The “doing” part, the reason Parker is huge today, is a whole other story. Sam DeNardo pulled back the curtain on Sands: “I think he [Sands] was talking to people outside the room about what he was doing. That got him in a lot of trouble. I heard it with my own ears.

There was some talk that he was talking to either his mother or somebody about different trades. The word got back to Rich. And I don’t know if it was that or his performance that got him cut from the program. He ultimately got cut.” Multiple Turtles gave the same basic story. Sands said he was not fired, but chose to resign. He said, “I’m sure some of them say I quit. I’m sure some of them say I was fired. I’m sure some of them say I had a big mouth and said things I shouldn’t have said.” On the other hand the leaflet for Sands’s 1992 seminars said he’d co-managed funds with Parker. Parker, said in most cases that Sands merely placed orders at his direction. He thought Sands’s prime motivation for selling the rules was to raise money and get back into trading. Parker thought Sands’s actions violated Dennis’s training not in a legal way, but in a moral and ethical one. He said of Dennis, “How could we repay him for giving us all this knowledge?” Parker added, “Rich always said that you can’t pay attention to books, articles or papers. If it was worth knowing, the people would keep it for themselves and trade.”

In the end, maybe Sands had simply embarrassed his Turtle peers so much that they felt they had to respond. The promotional language Sands and his marketing people used to sell the Turtle rules promised: “The Most Powerful, Valuable and Profitable Trading Method Ever . . . Now Revealed in a New Trading Course for Just a Small, No-Risk Investment!” Sands’s ads screamed about “A Very Affordable Low, Low Price! straight years of Profitable Trading!” Playing right into the attacks against him, Sands’s marketing pitched, “Listen, there are a lot of people very upset that Russell is sharing these secrets, especially at such a low price. The other original Turtles and their phenomenally successful mentor do not want these priceless secrets revealed. At any price!”

It was like a 2007 late-night infomercial from INVESTools. Eventually, DeNardo offered a more sympathetic interpretation of Sands’s teaching: “Everybody else is sort of mad at him for letting the system out of the bag. What else was he supposed to do? Drive a cab?” Erle Keefer gave another reason for the secrecy at any cost: “Honestly, I don’t think we were that sophisticated. I just think there was . . . allegiance to Rich.” Dennis’s own take on the selling of rules was tight-lipped. He made it clear, however, that a few Turtles had failed: “There were one or two [Turtles] who will remain nameless. The majority was exemplary.” He may have been diplomatic, but his longtime friend and fellow trader Tom Willis, who was and is no fan of Sands, was not: “I’ve always thought that Rich exemplifies the Christian attitude and behavior more than most Christians I know. He probably doesn’t hold a grudge against Russell.”

Russell Sands Fined $45,000 by NFA; Violation of Compliance Rules

Russell Sands was recently fined $45,000. Details follow:

COMPLAINT: On June 30, 2010, NFA issued a Complaint charging TFI and Russell Sands with using deceptive and misleading promotional material which failed to clearly label hypothetical performance as hypothetical and failed to include the required hypothetical disclaimer; using deceptive and misleading promotional material which exaggerated the profit potential and downplayed the risk of loss of trading commodities; using deceptive and misleading promotional material that attempted to minimize the significance of NFA’s earlier disciplinary Complaint; and using deceptive and misleading promotional material which failed to state that testimonials are not indicative of future performance and that all gains touted in the testimonials were not representative of all reasonably comparable accounts.

ANSWER: On September 3, 2010, TFI and Russell Sands filed an Answer to the Complaint in which they denied the material allegations contained therein.

DECISION: On January 20, 2011, pursuant to a settlement offer submitted by TFI and Russell Sands, TFI and Sands were ordered to pay a $45,000 fine. In addition, TFI and Sands were ordered to pre-submit all promotional material to NFA prior to first use for three years. This includes all material used by Sands’ Entities. Further, TFI and Sands were ordered to pre-submit all promotional material used by any Third-Party Marketers to NFA for approval prior to its first use for three years. TFI, Sands and Sands’ Entities were also ordered to provide to NFA a list of Third-Party Marketers with whom they transact business and update this list during the Pre-Review Period. Finally, TFI, Sands and Sands’ Entities were ordered to only transact business with those Third-Party Marketers which use promotional material to promote Turtle Products, if such promotional material is approved by NFA during the Pre-Review Period.

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