MMAT Stock Alert: Meta Materials to Pay $1 Million to Settle Securities Violations

Metamaterials (NASDAQ:MMAT) shares are in the spotlight after the company was accused of violating “the antifraud, reporting, internal accounting controls, and bookkeeping and recordkeeping provisions of the U.S. securities laws.” Meta has agreed to settle the charges for a $1 million fine without admitting or denying the wrongdoing.

In addition, the U.S. Securities and Exchange Commission (SEC) filed charges against former Meta Materials CEOs John Brda and Georgios Palikaras for market manipulation, fraud and other allegations. The charges relate to the merger of Brda’s Torchlight Energy Resources and Palikaras’ Metamaterials and the fact that the two individuals raised $137.5 million in an at-the-market (ATM) offering prior to the merger.

According to the complaint, Brda and Palikaras participated in a manipulative scheme that involved the issuance of a preferred stock dividend prior to the merger.

The SEC alleges that Brda and Palikaras “made insinuations via social media” and informed certain investors and advisers that the dividend would induce short sellers to cover their positions, resulting in a short squeeze and a higher stock price.

MMAT Stock: Meta Materials to Pay $1 Million to Settle Violations of Federal Securities Laws

In addition, the SEC notes that Brda and Palikaras “misrepresented the Company’s efforts to sell its oil and gas assets and distribute the proceeds to preferred stockholders, thereby giving investors a false impression of the amount of the dividend.”

While MMAT stock was experiencing hype from the dividend announcement, the two individuals took advantage of the attention and drove up prices with a $137.5 million ATM offering. Shortly after the offering, Brda allegedly told Palikaras that they had two days to “take advantage of the squeeze.”

The SEC is seeking permanent injunctions, a ban on directorships and civil penalties for Brda and Palikaras. In addition, the SEC has ordered Brda to repay all illegally earned profits.

“This behavior is particularly concerning because these are CEOs of publicly traded companies who were more concerned with ‘burning shorts’ than creating long-term value for shareholders,” said Eric Werner of the SEC.

In the meantime, the SEC’s investigation into MMTLP is still ongoing and anyone with useful information is encouraged to submit their findings to SEC.gov.

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Read more:Penny Stocks – How to profit without being cheated

At the time of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com Publishing guidelines.