The U.S. Securities and Exchange Commission (SEC) has filed a lawsuit against a subscription-based investment advisory company and its owner, accusing them of orchestrating a $1.4 million pump-and-dump scheme involving BioVie Inc., a purported drugmaker. The SEC’s complaint, filed Friday in Manhattan federal court, targets David Banister, 59, of Middletown, Rhode Island, and his company, The Market Analysts Group LLC.

Accusations of Market Manipulation

According to the SEC, Banister manipulated the trading prices of BioVie shares between December 2020 and March 2021. Banister used his company to promote BioVie stock to investors, encouraging them to buy and hold, while secretly planning to sell his own shares. The SEC alleges that the scheme involved Banister's subscribers, who followed his stock advice services, as well as users who saw his posts on Stocktwits, a popular social media platform where he had over 60,000 followers.

The SEC claims that Banister’s trades created an artificial appearance of demand for BioVie stock, misleading investors into overpaying. His actions reportedly led to significant price spikes in BioVie shares, which he highlighted to bolster his advice, all while intending to sell off his own holdings. Banister made $1.37 million in profits from the scheme.

Impact on Investors

The SEC’s lawsuit asserts that Banister’s actions resulted in financial harm to investors, who were misled into purchasing BioVie stock at inflated prices driven by his manipulative trades. The company, which focuses on developing therapies for neurological disorders and liver disease, trades on the Nasdaq exchange.

Legal Proceedings

The case is titled Securities and Exchange Commission v. Banister et al., case number 1:24-cv-09308, and is being heard in the U.S. District Court for the Southern District of New York. The SEC is represented by its own attorneys Sheldon L. Pollock, Michael D. Paley, Paul G. Gizzi, Jessica Quinn, and Laura Yeu. As of now, there has been no response from the defendants or their legal counsel.

This legal action highlights the SEC's ongoing efforts to crack down on securities fraud and market manipulation schemes that harm retail investors.