SEC Charges Meta Materials and Former CEOs with Market Manipulation, Fraud, and Other Violations
Author: Destiny Aigbe
June 26, 2024
The Securities and Exchange Commission (SEC) recently announced that it has filed charges against Meta Materials Inc. and its former CEOs, John Brda and George Palikaras, for market manipulation, fraud, and other violations. While Meta Materials has agreed to settle the SEC’s charges in an administrative proceeding, the litigation against Brda and Palikaras will proceed in federal district court.
Key Takeaways for Investors:
- Understanding the Allegations: The SEC's complaint alleges that Brda and Palikaras orchestrated a market manipulation scheme that enabled Meta Materials to raise $137.5 million from investors in an at-the-market (ATM) offering in June 2021. The scheme allegedly involved issuing a preferred stock dividend to create a "short squeeze" and artificially inflate the company's stock price.
- Misrepresentation of Company Efforts: The complaint further alleges that Brda and Palikaras misrepresented the company's efforts to sell its oil and gas assets and distribute the proceeds to preferred stockholders, misleading investors about the value of the dividend.
- SEC’s Legal Actions: The SEC is seeking permanent injunctions, officer-and-director bars, civil penalties from both defendants, and disgorgement with pre-judgment interest from Brda. Additionally, Meta Materials has been ordered to cease and desist from violations of the relevant federal securities laws and to pay a $1,000,000 penalty.
- Regulatory Oversight and Enforcement: This case underscores the SEC’s commitment to holding public company executives accountable for fraudulent practices that mislead investors. The SEC’s Fort Worth Regional Office led the investigation, highlighting the coordinated effort to maintain market integrity.
- Ongoing Investigations: A separate investigation regarding subsequent events related to Meta Materials (MMTLP) remains ongoing. Investors and individuals with information related to this or other suspected frauds are encouraged to contact the SEC staff by submitting a tip at SEC.gov.
By staying informed about such enforcement actions and understanding the SEC’s role in protecting investors, individuals can make more informed investment decisions and avoid potential fraudulent schemes.
About the Author
Destiny Aigbe
Managing Partner
Aigbe Law PLLC | Dark Alpha Capital
A Corporate and Securities Law Firm
With a robust foundation in law and finance, Destiny Aigbe has carved a distinguished career, underpinned by his pivotal role in orchestrating and managing complex transactions that have propelled companies to significant growth and market prominence. As a seasoned attorney and strategic advisor, Destiny has been instrumental in facilitating over $75 million in capital raises, demonstrating a keen acumen for securing funding and fostering investor confidence.
Destiny's leadership in the execution of six successful public listings, through meticulously structured reverse mergers and registration statements, showcases his adeptness in navigating the intricacies of the public markets and his capacity to guide companies through transformative growth phases. His involvement in five mergers as an operator further illustrates his versatile skill set, extending beyond legal expertise to include hands-on management and operational strategy, though these ventures did not involve funding.
Destiny's professional journey is marked by a commitment to excellence and a diverse range of experiences, from representing a wide spectrum of clients including public and private companies, and investment firms, to holding significant roles within the US government. His tenure with the US Department of State and the National Institutes of Health highlights his adaptability and his contribution to the advancement of entrepreneurial ventures in sectors like biotechnology and nanotechnology through strategic funding initiatives.
An alumnus of Vanderbilt University Law School, Destiny focused on Finance and Mergers & Acquisitions, further honing his expertise with a certificate in Law and Business. His foundational education in Finance was obtained with honors from the University of Maryland's Robert H. Smith School of Business, which laid the groundwork for his subsequent achievements in investment banking and legal practice.
Residing in the Washington, D.C. area, Destiny Aigbe continues to leverage his extensive experience and insightful leadership to drive innovation, growth, and success for his clients and the ventures he is involved with.
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