Aegis-Backed Farmmi Investments

Have you suffered losses after your broker recommended buying shares of the Aegis-underwritten company Farmmi? This is one of many Aegis-backed companies that has cost investors big losses.

Silver Law Group is a securities law firm that looks after investors’ interests. If you or someone you know have suffered losses from an Aegis investment recommendation, contact Attorney Scott Silver at ssilver@silverlaw.com or toll-free at (800) 975-4345 for a free consultation.

Farmmi (FAMI) is a China-based agricultural firm specializing in the production of edible mushrooms and the development of its exclusive agrarian technology. It runs an extensive network of family farms to grow its products. The company’s US headquarters is in San Francisco, with an additional 636,000 square foot warehouse and transportation facility in Los Angeles opened in 2024. Farmmi recently opened a similar facility in Somerset, NJ. The company exports its products throughout Southeast Asia, China, and Japan, as well as Europe, the Middle East, and North America.

Farmmi also operates Farmmi Jicai, an online store that sells edible fungi products under the Forasen, Farmmi, Liangpin, and other company brands. The company’s target market includes specialty food stores, restaurants, and cafeterias sold through local distributors.  Farmmi was incorporated on July 28, 2015, in the Cayman Islands, and became publicly traded on February 16, 2018.

Farmmi Raising Capital Through Stock Issuance

The company began offering shares of its common stock to raise capital in March of 2021, with Aegis as the underwriter. The stock’s rate of return as of February 2024 has been -95.5%. This led to notification from NASDAQ that the company’s stock was below its minimum bid price requirement of $1.00 for over 32 days. The company had until October of 2024 to regain compliance with NASDAQ’s requirement.

In 2021, Farmmi began selling its penny stocks for less than previous buyers paid. This led to the dilution of the stock, even though the company raised the capital it purportedly needed.

As of April 2, 2025, Farmmi has regained compliance with NASDAQ’s minimum bid price requirement under Listing Rule 5550(a)(2). Farmmi stock is now selling for over $1 per share.

Aegis Financial

A recent report from SLCG Economic Consulting indicates that Farmmi is one of many companies backed and underwritten by Aegis. Without the underwriting and support from Aegis, Farmmi may have gone bankrupt and closed. The report explains that since 2010, Aegis has been the sole underwriter of 186 offerings for 111 issuers totaling $1.9 billion. Of these offerings, 12 had positive returns while the remaining 174 had negative returns.

Aegis has an identifiable pattern of underwriting failing nano-stock companies to inflate their stock prices and resell these stocks to retail investors. Without Aegis’ backing, companies like Farmmi are usually on the edge of bankruptcy, de-listing, and eventually closing.

Aegis-underwritten securities were frequently placed into the accounts of the firm’s retail brokerage clients and subsequently re-traded within those accounts, often at substantial markups and markdowns. Additionally, Aegis acted as a market maker for many of these stocks, enabling the firm to earn revenue from bid-ask spreads. This practice also incentivized brokers who were heavily encouraged to promote these trades.

The firm is also alleged to have issued overly optimistic analyst reports on many of its underwritten stocks, consistently publishing aggressive buy ratings and setting unrealistically high price targets. This occurred even as the share prices of nearly all these companies declined sharply, in many cases approaching zero.

Like many of these companies, Aegis knowingly continued to underwrite Farmmi and resell the stock to its customers, who lost billions through this business practice.

Due Diligence And Regulation Best Interest

Brokers and broker-dealers must conduct due diligence on any securities they recommend to their clients. Due diligence involves examining the securities against each client’s investment profile, risk tolerance, and current financial circumstances. This requirement is further enforced by Regulation Best Interest. Brokers are always required to make recommendations that are in each client’s individual best interests.

Those who do not consider their client’s best interests and cause them to experience losses can be liable for the financial harm the clients have suffered. In many cases, a client can file a FINRA arbitration to resolve the dispute and possibly recover their losses. This is easier and less expensive than filing a lawsuit against the broker and broker-dealers.

Aegis Capital has developed a reputation as a brokerage firm for small cap companies, with a business model centered on underwriting high-risk, often failing nano-cap stocks-securities notorious for their volatility and unsuitability for most retail investors. Aegis has continued to push these speculative stocks onto retail clients, resulting in staggering financial losses estimated between $3 billion and $5 billion in recent years.

Independent analyses have documented that many of Aegis’s underwritten offerings have produced negative returns. For example, according to a report, out of 186 issues underwritten by Aegis, over 93% posted losses, with average returns dramatically underperforming both the broader market and microcap indices. In many cases, investors lost over 90% of their investment within a year of the offering, incurring significant additional costs through excessive markups, markdowns, and trading spreads.

Regulatory bodies have sanctioned Aegis Capital for failing to implement adequate supervisory systems and for allowing unsuitable investment recommendations, excessive trading, and other practices undermining investor protection. However, these measures have not curbed the firm’s ongoing pattern of harmful conduct. Investigations continue to highlight tactics such as artificially inflating stock prices and obscuring the true financial health of issuers, further eroding investor trust and compounding losses.

Did Your Aegis Financial Broker Recommend Farmmi? 

Silver Law Group represents investors in stockbroker misconduct cases involving allegations of negligence, breach of fiduciary duty, failure to supervise, and other causes of actions. These claims are frequently submitted to FINRA which administers the largest arbitration forum for investor disputes. We handle these cases on a contingency fee basis.

Silver Law Group represents the interests of investors who have been the victims of investment fraud. Our attorneys represent investors in class actions against issuers and securities arbitration claims against brokers for misconduct like the allegations against Aegis. Scott Silver, managing partner of Silver Law Group, is the chairman of the Securities and Financial Fraud Group of the American Association of Justice and represents investors nationwide in securities investment fraud cases. Please contact Scott Silver for a no-cost consultation at ssilver@silverlaw.com or toll-free at (800) 975-4345.