David Banister, et al.
U.S. SECURITIES AND EXCHANGE COMMISSION
Litigation Release No. 26187 / December 10, 2024
Securities and Exchange Commission v. David Banister, et al., No. 1:24-cv-09308 (S.D.N.Y. filed Dec. 6, 2024)
SEC Charges Unregistered Investment Advisers with Fraud for Misleading Stock Touts and Manipulative Trading
The Securities and Exchange Commission announced today it filed charges against David Banister of Middletown, Rhode Island and an entity he controls, The Market Analysts Group, LLC, for conducting a fraudulent scheme to promote long-term investment in a Nasdaq-listed issuer without disclosing that he was actively selling his own shares of the same issuer. The SEC also alleges that Banister engaged in manipulative trading in the issuer and made a profit of more than a million dollars from the fraud.
The SEC's complaint alleges that Banister and The Market Analysts, while acting as unregistered investment advisers, made misleading statements to paying subscribers to two of their stock advisory services, Tipping Point Stocks and Stock Reversals Premium, and to the public through their posts on internet message board Stocktwits, where their @StockReversals account had more than 60,000 followers. According to the Complaint, from about December 2020 through at least March 2021, Banister, who referred to himself on the Market Analysts' website as "one of the top market forecasters in the world," encouraged his subscribers and Stocktwits followers to buy and hold shares of BioVie, Inc., portraying it as a good long-term investment, while actually selling BioVie shares.
The SEC's complaint, filed in the U.S. District Court for the Southern District of New York, charges Banister and The Market Analysts with violations of antifraud provisions of the federal securities laws, specifically Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Investment Advisers Act of 1940. The Complaint also charges Banister with violations of Section 9(a) of the Exchange Act. The SEC seeks permanent injunctions, disgorgement with prejudgment interest and civil penalties against both defendants.
The SEC's Office of Investor Education and Advocacy has previously alerted investors to the significant risks of making investment decisions based on stock recommendations conducted through social media. The SEC encourages victims of the alleged fraud to contact MarketAnalystsVictim@sec.gov.
The SEC's investigation was conducted by Laura Yeu, Ricky Tong, and Michael Paley, under the supervision of Sheldon L. Pollock, and the litigation will be led by Paul Gizzi and Jessica Quinn, and supervised by Mr. Pollock and Daniel Loss, all of the SEC's New York Regional Office. The SEC's examination that led to the investigation was conducted by Ronald R. Krietzman, David M. Jaffe, John L. Celio, Dee-Ann DiSalvo, and Kyle Duffy of the New York Regional Office.