A Houston-based penny stock company and four individuals are being charged after the SEC discovered they were behind a pump-and-dump scheme that misled investors to believe the company was on the brink of developing revolutionary technology to enable environmentally friendly oil-and-gas production.
The SEC alleges that one individual involved orchestrated the scheme by creating a shell company called Chimera Energy, secretly obtaining control of all shares issued in an initial public offering (IPO) in late 2011, and launching an aggressive promotional campaign midway through 2012 to hype the stock to investors. Chimera Energy issued around three dozen press releases in a two-month period about its supposed licensing and development of technology to extract shale oil without the perceived environmental impact of hydraulic fracturing known as fracking. However, Chimera Energy did not actually license or even possess the technology it touted and had not achieved the claimed results in commercially developing it. While the stock was being pumped by the false claims, entities controlled by the individual dumped more than 6 million shares on the public markets for illicit proceeds of more than $4.5 million.
The SEC suspended trading in Chimera Energy stock in 2012 and prevented the individual and his associates from dumping additional shares or misleading new investors into their scheme.
For more information, visit SEC Announces Charges in Houston-Based Scheme Touting Technology to End Fracking
