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SEC sues Texas man over bogus $200 million rescue

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Virgin Orbit shares rose 33% post-offer

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Virgin Orbit later filed for Chapter 11 bankruptcy

(Adds comment from defendants, paragraphs 6-7)

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 is believed to live in the Dallas-Fort Worth area, the

SEC said. His firm, Matthew Brown Cos, is also a defendant.

In a statement on Tuesday, the defendants said the SEC

complaint was filled with "egregious errors," "fabrications" and

"biased allegations" that favored Virgin Orbit management.

"We are steadfast in our commitment to thoroughly

contest these issues, if they arise, through the trial process,"

the defendants said. "We will not settle until we are vindicated

by the rule of law."

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 ( SPCE ) in 2017.

Virgin Orbit 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.