Thursday, April 25, 2024
Dividend Stocks

SEC Names Meta Materials in Pump-and-Dump Scheme Lawsuit

Source: Mark Van Scyoc / Shutterstock.com

The U.S. Securities and Exchange Commission (SEC) dropped a major bombshell after it filed a $100 million lawsuit against eight social media influencers, including @MrZackMorris, whose real name is Edward Constantin. Constantin boasts over 500,000 followers on his Twitter account and regularly tweets out stock advice on low-float penny stocks. All eight of these individuals were involved with Atlas Trading, a trading group on Discord. From January 2020 to the present day, the individuals made approximately $100 million from their scheme.

Back in February of 2021, MetaMaterial had not yet merged with Torchlight Energy Resources. The two companies would eventually merge to form Meta Materials (NASDAQ:MMAT) but not before a major pump-and-dump scheme was enacted, according to the SEC.

On Feb. 10, Matlock, Mitchell Hennessey, Gary Deel and Daniel Knight purchased a combined 798,002 shares in Torchlight. Let’s get into the details.

Meta Materials Named in SEC Lawsuit

Following the purchases, the group embarked on a campaign to promote Torchlight to their hundreds of thousands of followers. After the promotion, their unsuspecting followers would buy in and pump up the price, which led the group to sell out with significant gains. The group would then continue to promote the company as if they still held shares. Furthermore, they would often sell their entire stake and then buy back in.

The group used the then-upcoming merger with Meta as a catalyst for their followers to buy in. For example, Hennessey claimed that Meta would potentially partner with Tesla (NASDAQ:TSLA) and had coronavirus-fighting applications in store. He noted to his followers that the company had a “10 billion dollar MARKET CAP POTENTIAL.”

In one example, Matlock posted in Discord: “TRCH going to 4+ after hours on @Hugh Henne new found covid DD.” However, Matlock immediately sold out of 49,602 shares for $3.32 per share following the message, disregarding his own $4 price target.

From Feb. 10 to Feb. 23, the group allegedly made profits of $775,629 from their scheme. The promotion resulted in a massive rise in price for Torchlight, which the company used to its advantage by issuing over $100 million in at-the-market offerings.

Based on the lawsuit, the eight individuals will face disgorgement of all their illegal gains and pay civil penalties. They may also be banned from trading securities in the future and face jail time, as criminal charges have been filed against them.

On the date 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 writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Source link

Share with your friends!

Products You May Like

Leave a Reply

Your email address will not be published. Required fields are marked *

Get the latest stocks updates
straight to your inbox

Subscribe to our mailing list and get interesting stuff and updates to your email inbox.

x  Powerful Protection for WordPress, from Shield Security
This Site Is Protected By
Shield Security