US SEC sues over alleged bogus bailout of Richard Branson’s Virgin Orbit

SEC-VIRGIN ORBIT/ (PIX):US SEC sues over alleged bogus bailout of Richard Branson's Virgin Orbit

Published18 Jun 2024, 01:56 AM IST
US SEC sues over alleged bogus bailout of Richard Branson's Virgin Orbit
US SEC sues over alleged bogus bailout of Richard Branson’s Virgin Orbit


SEC sues Texas man over bogus $200 million rescue


Virgin Orbit shares rose 33% post-offer


Virgin Orbit later filed for Chapter 11 bankruptcy

By Jonathan Stempel

June 17 (Reuters) - A Texas man was sued by the U.S. Securities and Exchange Commission on Monday over his alleged fraudulent $200 million offer to rescue billionaire Richard Branson's now-defunct satellite launch services company Virgin Orbit.

The SEC said Matthew Brown falsely portrayed himself, including on CNBC, as an experienced venture capitalist with investments in "over 13 space companies" when he made a bogus offer to buy Virgin Orbit stock on March 19, 2023, as the company teetered near bankruptcy.

According to the SEC, Brown fabricated a screen shot of his company's bank account to show a "current" balance of $182,383,991 though it contained less than $1, and demanded that Virgin Orbit pay a 3% "break-up" fee if his investment did not close.

Virgin Orbit's stock price rose 33% after the offer but fell after it collapsed, according to the complaint filed in the Fort Worth, Texas, federal court. The SEC is seeking a civil fine, a ban on offering securities, and other remedies.

Brown could not immediately be reached for comment. The SEC believes he lives the Dallas-Fort Worth area. A Dallas address shown for him in court papers and public records contained an unlisted number. Once worth $3.8 billion and counting the U.S. military among its largest customers, Virgin Orbit filed for Chapter 11 protection on April 4, 2023, after struggling to secure long-term funding in the wake of a failed launch three months earlier.

The company had been spun off from Branson's space tourism company Virgin Galactic in 2017. Virgin Orbit had ended contact with Brown on March 25, 2023, two days after he told CNBC he was in "final discussions" on a rescue, because it found issues with his credibility, three people familiar with the talks said at the time.

In interviews with Reuters in early April 2023, Brown dismissed accusations of deception.

"I absolutely, 100%, had the money," he said.

The case is SEC v Brown, U.S. District Court, Northern District of Texas, No. 24-00558.

(Reporting by Jonathan Stempel in New York Editing by Matthew Lewis)

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First Published:18 Jun 2024, 01:56 AM IST
HomeCompaniesNewsUS SEC sues over alleged bogus bailout of Richard Branson’s Virgin Orbit

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