SEC Charges Texas Resident with Submitting Bogus Offer to Invest $200 million in Virgin Orbit

June 17, 2024/US SEC

The Securities and Exchange Commission today charged Dallas-Fort Worth resident Matthew Brown and his company, Matthew Brown Companies, LLC, for engaging in a fraudulent scheme to submit and publicly tout a bogus offer to invest $200 million in Virgin Orbit Holdings, Inc. (“Virgin Orbit”), formerly a public company listed on Nasdaq under the ticker symbol VORB.

According to the SEC’s complaint, on March 19, 2023, Brown submitted an unsolicited investment offer as Virgin Orbit was teetering on the brink of bankruptcy. Brown told Virgin Orbit’s CEO that he had previously invested hundreds of millions of dollars of his “personal capital,” primarily in space companies. To convince Virgin Orbit that his offer was legitimate, the SEC alleges that Brown sent Virgin Orbit a fabricated screenshot of his company’s bank account purporting to show a balance of over $182 million dollars. The SEC alleges that the bank account actually had less than $1. In addition, the SEC claims that Brown told Virgin Orbit that he held a law degree from Dallas-based Southern Methodist University, when in fact Brown had never graduated from college.

After Brown’s offer was leaked to the media, Virgin Orbit’s stock price rose approximately 33.1%. Despite signing a Non-Disclosure Agreement with Virgin Orbit, Brown then appeared on CNBC on March 23, 2023 to tout his offer and falsely portray himself and his company as experienced venture capitalists with “positions in over 13 space companies.” According to the SEC, Brown had a negative net worth at the time and no past or present holdings in the space industry. The SEC alleges that Brown later refused to place any funds in escrow and refused to respond to Virgin Orbit’s due diligence inquiries; thereafter, negotiations quickly broke down. Virgin Orbit filed for bankruptcy on April 4, 2023, and was delisted from Nasdaq on May 2, 2023.

The SEC’s complaint, filed in U.S. District Court for the Northern District of Texas, charges Brown and his company with violating Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder. The SEC seeks permanent injunctions, a civil penalty against Brown, and an officer-and-director bar against Brown.

The SEC’s investigation was conducted by Melanie Good of the Fort Worth Regional Office and supervised by Jim Etri and B. David Fraser. The litigation will be led by Patrick Disbennett and supervised by Keefe Bernstein. The SEC appreciates the assistance of the Tarrant County District Attorney’s Office.

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