SEC Obtains Summary Judgment Against Andrew Farmer in Pump-And-Dump Scheme
The Securities and Exchange Commission (SEC) announced on October 9, 2015, that on October 7, 2015, it secured a summary judgment on all of its claims against Andrew Farmer in a market manipulation case involving the securities of Chimera Energy Corp. The SEC suspended trading in Chimera Energy stock in 2012.
In its memorandum and order, the Honorable Keith I. Ellison of the United States District Court for the Southern District of Texas found that:
- In 2011 and 2012, Andrew Farmer orchestrated an elaborate scheme through which he gained control, at nominal cost, of millions of shares of Chimera stock.
- Chimera and Farmer conducted a public relations barrage designed to pump up the company’s stock price, despite the fact that Chimera had only nominal assets and illusory business dealings.
- The non-hydraulic fracturing technology touted by Chimera and Andrew Farmer was “entirely fictitious.”
- Farmer personally pocketed more than $4.1 million from his deceptive conduct.
- The SEC’s evidence “established the existence of a complex and methodical money-making scheme of which the various statements and omissions were interlocking parts.”
Based on these findings, the court ruled that Farmer violated Sections 5 and 17(a) of the Securities Act of 1933 and Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder.
The Court will decide the appropriate remedies against Andrew Farmer at a later date.
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