Meta Materials Inc., a Nebraska company, has been charged by a government watchdog for breaching federal antisecurity, record keeping, and securities laws.
Meta Materials Inc. operates in Nebraska despite being based in Nova Scotia, Canada. This prompted the Securities and Exchange Commission (SEC) to charge the U.S. company swiftly.
The former CEOs of the company, John Brda and George Palikaras, are not exempt from the charges. They will be directly involved in the case, facing both a federal suit and a separate administrative charge.
Nebraska company charged for federal rules breaches
The case revolves around a premeditated market manipulation scheme by Meta Materials and the company’s two former CEOs. Both CEOs owned separate companies, Brda’s Torchlight Energy Resources Inc. and Palikaras’ Metamaterial Inc., which formed Meta Materials.
In June 2021, the merger raised an at-the-market (ATM) of $137.5 million from investors. Brda and Palikaras allegedly issued an inflated preferred stock dividend immediately before the merger, which was a serious breach of federal trade rules.
Moreover, the SEC report alleges that the two CEOs let other investors and consultants know of the deal and dividend before the deal was announced. They reportedly inflated prices and the valuation of the merger, taking advantage of the bloated financial numbers and investors.
They have also been charged with violating the antifraud and proxy disclosure provisions of the federal securities laws. The SEC has charged Brda with aiding and abetting Meta Materials’s violations of “reporting, internal accounting controls, and provisions for books and records.”
Meta Materials has also been hit with an administrative penalty of $1,000,000 for violating antifraud, reporting, internal accounting controls, and recordkeeping provisions of federal securities laws.
“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,” said Eric Werner, Director of the SEC’s Fort Worth Regional Office. “This conduct is particularly alarming because it involves public company CEOs who were more concerned with ‘burning the shorts’ than creating long-term value for shareholders.”
Image: Pixlr.
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