FINRA Bars Former Sagepoint Financial Broker for Stock Manipulation of an Illiquid OTC Security

Silver Law Group is investigating former Sagepoint Financial, Inc. (CRD# 133763) broker Gary E. Donovan (CRD# 866235) after FINRA permanently barred Donovan for placing limit buy orders for an illiquid OTC security MIXX.

In May 2016, FINRA permanently barred Donovan after he placed 180 buy orders for Mix 1 Life, Inc. (“MIXX”), an illiquid security traded on the OTC Markets, in 90 customer accounts according to the Acceptance, Waiver & Consent (“AWC”) entered into with FINRA.  Donovan also placed buy orders in two other accounts owned by himself and his immediate family members, according to the AWC.

According to the AWC, Donovan made the purchases at a stock promoter’s direction.  Donovan, according to the AWC, placed 100 limit orders that were matched in amount and price with recently-placed sell limit orders.  Donovan’s limit orders were frequently priced above the market and/or inside ask price for MIXX, according to the AWC, and the orders had the effect of stabilizing the price of MIXX at around $6.00 per share.

As all situations go with market manipulation, what artificially goes up must come down eventually.  According to the AWC, once Donovan stopped dealing with the stock promoter and making those inflated purchases, the price of MIXX fell to less than $1.00 per share, causing Donovan, his family, and his customers to lose most of their investments.

According to the AWC, FINRA alleged that Donovan knew or should have known that his buy orders were being matched with identical orders and thus facilitating a stock manipulation of MIXX.  Consequentially, FINRA permanently barred Donovan.

MIXX is a protein shake company based out of Scottsdale, Arizona.  It is currently trading around $0.50 per share.

According to the SEC, manipulation is intentional conduct designed to deceive investors by controlling or artificially affecting the market for a security.  It is a serious issue that the SEC constantly tries to educate investors on.  More often than not, microcap stocks, including penny stocks, are more susceptible to stock price manipulation.

Sometimes an investor gets caught up in the manipulation inadvertently.  Sometimes, as in the case with Donovan who had discretion to trade in 83 of the MIXX-traded accounts according to the AWC, investors are completely unaware of being uninvolved until the whole thing explodes.  Allow us to try and recover losses due to stockbroker or securities fraud.

If you have invested with Gary E. Donovan and Sagepoint Financial, Inc. in Mix 1 Life, Inc. (MIXX) and have lost money doing so, you may be able to recover some or all of your losses.  Our lawyers are experienced in recovering investor losses due to broker and brokerage firm misconduct through FINRA arbitration.

Silver Law Group represents the interests of investors who have been the victims of investment fraud.  If you have questions about your legal rights, please contact Scott Silver of the Silver Law Group for a free consultation at ssilver@silverlaw.com or toll free at (800) 975-4345.