South Florida Arbitration & Litigation Lawyer Blog
Securities and Exchange Commission v. Andrew Farmer and Iridium Capital, Ltd., Civil Action No. 4:13-mc-00014-Y (N.D. Tex.)
SEC Files Subpoena Enforcement Action Against Andrew Famer and Iridium Capital, Ltd. for Failure To Produce Documents in Market Manipulation Investigation
The Securities and Exchange Commission recently announced that on April 9, 2013 it filed a subpoena enforcement action in the U.S. District Court for the Northern District of Texas against Andrew Farmer and Iridium Capital, Ltd. (Iridium). According to the filing, the SEC is investigating possible market manipulation in connection with transactions in the securities of Chimera Energy Corporation (Chimera), whose shares were traded on the over-the-counter market. Pursuant to subpoenas issued in December 2012, Farmer and Iridium Capital, Ltd. were obligated to produce documents to the Commission, but have failed to do so. Accordingly, the SEC filed its Application for an Order Requiring Compliance with Administrative Subpoenas.
The SEC’s application explains that beginning in July 2012, Chimera commenced a promotional campaign that caused a dramatic increase in the trading volume and price of its stock. The SEC is investigating, among other things, whether the claims in Chimera’s press releases are materially false or misleading. On October 25, 2012, the SEC temporarily suspended trading in the securities of Chimera because of questions concerning the accuracy and adequacy of publicly disseminated information about, among other things, Chimera’s business prospects and agreements.
As part of its investigation, the staff in the SEC’s Fort Worth Regional Office issued subpoenas to Farmer and Iridium in December 2012 seeking, among other things, materials related to their transactions in Chimera securities and to Chimera’s business. According to the SEC’s court papers, Farmer played an integral role in Chimera’s transition from a privately held to a publicly traded company. And, before Chimera’s securities became available for purchase to the public on the over-the-counter market, entities controlled by Farmer or for which Farmer acted as agent acquired millions of Chimera shares in private transactions, while Iridium, which Farmer also controlled, assisted in effectuating these transactions. According to the court papers, once Chimera’s promotional campaign was under way, entities controlled by Farmer sold to the public a substantial number of their privately obtained Chimera shares, generating hundreds of thousands, if not millions, of dollars in profits.
Pursuant to its application, the SEC is seeking an order from the federal district court compelling Farmer and Iridium to produce all materials responsive to the subpoenas and compelling Farmer to provide sworn testimony. The SEC notes that it is continuing to conduct a fact-finding investigation and has not concluded that anyone has broken the law.
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