Meta Materials and Former CEOs Face SEC Charges for Alleged Market Manipulation

The Securities and Exchange Commission (SEC) has taken action against Meta Materials Inc. and its former CEOs, John Brda and George Palikaras, alleging a market manipulation scheme that raised $137.5 million from investors in 2021.

The case centers on events surrounding the merger of Torchlight Energy Resources and Metamaterial Inc., which formed Meta Materials. The SEC claims that Brda and Palikaras engineered a plan to artificially inflate the company's stock price by issuing a preferred stock dividend and suggesting it would trigger a "short squeeze."

According to the complaint, the former executives used social media to hint at their strategy, encouraging investors to buy or hold the stock in anticipation of the dividend. Meanwhile, Meta Materials allegedly capitalized on the inflated prices through an at-the-market offering.

Eric Werner, Director of the SEC's Fort Worth Regional Office, commented on the case,"The conduct we allege was a sophisticated, yet brazen plan by a public company and its former CEOs to purposely mislead investors in the company's stock."

The SEC has charged Brda and Palikaras with violating antifraud and proxy disclosure provisions of federal securities laws. The Commission is seeking injunctions, officer-and-director bars, and civil penalties against both defendants.

In a separate action, Meta Materials has agreed to settle charges without admitting or denying the findings, paying a $1 million penalty and agreeing to cease and desist from further violations.

This case demonstrates the SEC's focus on combating market manipulation, particularly in the era of social media-influenced trading. The Commission has noted that a related investigation into subsequent events involving Meta Materials is ongoing.

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