When a venture capitalist appeared on CNBC last year, confirming his plans to inject millions in cash into bankrupt space company Virgin Orbit, he was characterized as a “white knight” investor.
One year later, not only is there no deal but he’s being sued by the SEC over allegations of fraud.
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Matthew Brown, the founder of venture capital firm Matthew Brown Companies, is the target of some very serious claims, and the Securities and Exchange Commission this week filed suit in Texas over what they call a “bogus offer” Brown made to invest $200 million into Richard Branson’s Virgin Orbit Holdings.
Last year, Brown appeared on CNBC claiming to be in discussions with fledgling Virgin Orbit, with enough money on hand to make the company “cash flow positive.” He also indicated that he had some related experience, attesting to having financial positions in some 13 space companies.
And while Bloomberg says those discussions were taking place, the SEC claims that Brown fabricated a screenshot of his bank account balance – and instead of containing $182 million like he claimed, it actually contained less than $1.
The SEC became involved because his news appearance caused shares of Virgin Orbit to suddenly spike, a move the agency believes was tantamount to “misleading investors” because he “falsely portrayed himself as an experienced venture capitalist.”
They say he also tried to negotiate a 3% “break-up” fee for Virgin Orbit to pay him if the deal didn’t close, but failed to respond to the company’s due diligence requests. Reports say the company killed the deal two days after Brown’s news appearance because they allegedly found issues with his credibility. When the deal was revealed dead, Virgin’s stock plummeted and the company filed for bankruptcy protection shortly thereafter.
The SEC is seeking cash fines and a ban on offering securities.
In an April 2023 interview with Reuters Brown said that he “absolutely, 100%, had the money.”
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