Did Aegis Capital Recommend You Purchase Stocks Underwritten By Aegis?

Brokerage firm Aegis Capital’s track record has come under fire after SLCG Economic Consulting published a report on the firm’s offerings in the last few years. The report calls Aegis Capital a “farm-to-table securities fraud purveyor” after their underwriting and subsidizing of consistently failing small cap stock companies.

Aegis’ underwriting included propping up companies “constantly on the verge of delisting and bankruptcy.” These failing stocks were sold to Aegis’ retail brokerage customers, then traded and re-traded “at significant markups and markdowns,” with considerable financial incentives for brokers who did. Trading in these worthless stocks led to Aegis’ investors losing at least $5 billion, according to the report. These companies included:

• Alset EHome International—raised almost $100M in 2021 and lost over 90%
• Document Security Systems—raised approximately $120M between 2019-2021 and lost over 90%
• Farmmi—raised approximately $130M in 2021, lost over 90%
• Meten EdTechX Ed—raised approximately $125M in 2021-2022, lost over 70%
• Volcon—raised approximately $50M in 2021-2023, lost over 90%

Aegis continued to underwrite failing companies that needed capital while allegedly failing at due diligence into these companies’ operations. At the same time, Aegis continued to recommend these failing stocks to its retail customers, knowing that they were very nearly worthless. Some investors have pursued securities arbitration claims against Aegis alleging that the investments were unsuitable or that Aegis failed to disclose the known materials risks of the investments. Many of these investors claim that they were small investors saving for retirement and unable to take the risk of highly speculative or failing companies.

Meten/BTC Digital

One particularly worthless stock that the report features is Meten. The report calls this example “typical of Aegis’ conduct.” Aegis continually promoted and sold stock from a company then called Meten Holding Group, later known as BTC Digital.

Originally, Meten was a Chinese company that provided English language training (ELT) online and offline. In 2017, Meten was acquired by EdtechX Holdings Acquisition Corp. In 2022, Meten ceased ELT and began acquiring Bitcoin mining machines. The company also changed its name to “BTC Digital” and its stock ticker from METX to BTCT.

From 2021 through 2022, Aegis underwrote four fraudulent Meten stock issuances that totaled $126 million while publishing research analyst reports supporting convincing recommendations for buying and improbable price targets. Investors lost at least $126 million just on Meten stock issues because of Aegis’ underwriting of these fraudulent stock offerings.

Aegis Capital Is The Subject Of Multiple FINRA Arbitration Claims

Aegis is a broker dealer with a responsibility to its retail customers but allegedly failed to meet that responsibility in many circumstances. Since at least 2014, Aegis underwrote roughly $2 billion in worthless securities, with over $1 billion since 2021. Aegis created its market for these worthless securities, bringing them into retail customers’ accounts. These customers and investors have lost 98% of their initial investment while large-cap and microcap stock markets have seen increases and positive returns.

Additionally, these same investors also lost over $1.5 billion in unnecessary markups, markdowns, and bid-ask spread when trading securities that Aegis underwrote knowing that they were worthless according to reports. Other investors have filed complaints against Aegis that their financial advisor recommended these securities with glowing recommendations that they were sure to appreciate in value without disclosing the speculative nature of the investments or the risks associated with small cap securities or the relationship that Aegis had with the issuers.

Did You Invest In One Of Aegis’ Underwritten Companies? 

Silver Law Group represents investors in securities and investment fraud cases. Our lawyers are admitted to practice in New York and Florida and represent investors nationwide to help recover investment losses due to stockbroker misconduct. If you have any questions about how your account is handled, call to speak with an experienced securities attorney. Most cases are handled on a contingent fee basis, meaning you won’t owe us until we recover your money for you. Contact us today at (800) 975-4345 and let us know how we can help.