SEC v. John Brda; and Georgios Palikaras, No. 1:24-cv-04806, Southern District of New York (June 25, 2024) — Complaint

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF NEW YORK
SECURITIES AND EXCHANGE COMMISSION,
   Plaintiff,
 v.
JOHN BRDA,
GEORGIOS PALIKARAS,

 Defendants.

         Civ. Action No. 1:24-cv-004806
    JURY TRIAL DEMANDED

COMPLAINT
The Securities and Exchange Commission (“SEC”) files this Complaint against John
Brda (“Brda”) and Georgios Palikaras (“Palikaras”) (together, “Defendants”), and alleges as
follows:
I. SUMMARY
1. Defendants engaged in a fraudulent scheme to manipulate the price of Torchlight
Energy Resources, Inc. (“Torchlight”) stock and sell Torchlight stock to investors at inflated
prices. Defendants’ scheme artificially inflated the price of Torchlight stock in June 2021,
causing the price to increase by over 200% in a single week. Defendants capitalized on their
scheme by causing Torchlight to conduct an at-the-market offering (“ATM Offering”) at the
peak of their price manipulation, selling 16.2 million shares at inflated prices.
2. Brda, as CEO of Torchlight, first devised the scheme in early 2020 in response to
Torchlight’s deteriorating financial condition. Torchlight’s stock was trading below $1.00 per
share at the time, and Torchlight needed capital to pay its significant debt obligations and to fund

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ongoing drilling expenses of its oil and gas assets. Brda hatched a plan to artificially inflate the
price of Torchlight’s stock and raise capital by selling Torchlight shares at inflated prices.
3. To accomplish his plan, Brda devised a series of transactions intended to create a
short squeeze. Those transactions included a merger agreement between Torchlight and another
company, along with a dividend—in the form of preferred stock issued to shareholders of record
at closing—that Torchlight would not register or make available for immediate trading on any
exchange (“Preferred Dividend”).
1
 Shareholders who received the Preferred Dividend would
purportedly be entitled to receive the net proceeds of the sale of Torchlight’s oil and gas assets.
Brda believed, and intended to lead investors to believe, that the Preferred Dividend would force
short sellers to exit their positions and trigger a short squeeze that would inflate the price of
Torchlight’s publicly traded stock.
4. As the first step in his plan, Brda sought a suitable merger partner. He found that
partner in Palikaras, the CEO of Metamaterial, Inc. (“Meta I”). Brda told Palikaras about the
scheme at the outset of negotiations. Palikaras fully embraced and participated in the scheme.
5. Brda and Palikaras initially believed that merely announcing the Preferred
Dividend in a press release accompanying the merger’s announcement would cause a short
squeeze and a resulting surge in Torchlight’s stock price. But when the market did not appear to
immediately react following that announcement, Defendants took further action and deceptively
promoted the Preferred Dividend in hopes of spreading their short squeeze narrative and,
consequently, increasing Torchlight’s stock price. They did so through, among other means,
private communications with select investors and third-party consultants, who they intended to

1
 Unless specified otherwise, the term “Preferred Dividend” used in the Complaint generally
refers to the corporate dividend and/or the preferred stock issued pursuant to that dividend.

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spread the message for them. Without publicly revealing that they were the source of the short
squeeze narrative or fully disclosing their intent or plan, Defendants intended their deceptive
promotional efforts to artificially inflate the price of Torchlight stock by: (i) causing short sellers
to exit their short positions, and (ii) enticing other investors to acquire or hold Torchlight stock.
6. As part of their scheme, Defendants also made false and misleading statements
and omissions to investors about the Preferred Dividend to further inflate the value of Torchlight
stock. In Torchlight’s public filings and proxy statements, Brda made false and misleading
statements and omissions that were intended to create the false impression that Torchlight’s oil
and gas assets would be quickly monetized and distributed to Preferred Dividend holders within
six months of the merger, when in fact there were no prospects of that happening. Similarly,
Palikaras made statements to a group of investors—which were recorded and later circulated and
widely cited on social media—that the net proceeds payable to Preferred Dividend holders could
range between $1–$20 per share, which had no basis in fact. Palikaras also told that same group
of investors that Torchlight was speaking to “the right potential buyers” and that they were “top
tier,” when in fact Torchlight had not identified any potential buyers at the time.
7. Defendants succeeded in their aim to manipulate the price of Torchlight stock in
the days leading up to the merger closing. Before the merger was announced, Torchlight stock
was trading below $1.00 per share. As a result of Defendants’ scheme, Torchlight’s stock price
sharply rose during a ten-day period—between June 14–24, 2021—from $3.58 per share to as
high as $10.88 per share before dropping back to $4.95 per share by June 25, 2021.
8. When Torchlight’s stock price began to surge, Brda wrote Palikaras: “We have
two days to take advantage of the squeeze[.]” (emphasis added). Between June 18–24, 2021,
Brda caused Torchlight to sell off-the-shelf shares into the public markets in an ATM O ffering.

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Over the five-day ATM Offering, Torchlight sold 16.2 million shares to investors at an average
price of $8.50 per share. In total, the ATM Offering raised $137.5 million from investors. These
proceeds primarily benefitted the company that resulted from the Torchlight-Meta I merger—
Meta Materials, Inc. (“Meta II”)—which appointed Palikaras as CEO. And for his part, Brda
demanded and received a $1.5 million bonus.
9. By engaging in the acts and conduct alleged herein, Defendants violated Section
17(a) of the Securities Act of 1933 (“Securities Act”) and Sections 10(b) and 14(a) of the
Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5 and 14a-9 thereunder. Brda
also aided and abetted Meta II’s violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the
Exchange Act and Rules 12b-20 and 13a-11 thereunder.
10. For Defendants’ violations, the SEC seeks: (i) permanent injunctive relief against
both Defendants; (ii) an officer and director bar against both Defendants; (iii) disgorgement of
ill-gotten gains and prejudgment interest thereon against Brda; (iv) civil penalties against both
Defendants; and (v) such further relief as the Court may deem just and appropriate.
II. JURISDICTION AND VENUE
11. The SEC brings this action pursuant to the authority conferred upon it by Sections
20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)] and Sections 21(d) and
21(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and 78u(e)].
12. This Court has jurisdiction over this action pursuant to Sections 20 and 22(a) of
the Securities Act [15 U.S.C. §§ 77t and 77v(a)] and Sections 21(d), 21(e), and 27 of the
Exchange Act [15 U.S.C. §§ 78u(d), (e), and 78aa].
13. Defendants, directly or indirectly, made use of the mails or means or
instrumentalities of interstate commerce, and/or made use of the mails or means or instruments
of transportation or communication, or of facilities of a national securities exchange in interstate

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commerce, in connection with the acts, practices, transactions, and courses of business alleged in
this Complaint.
14. Venue is proper in this District pursuant to Section 22(a) of the Securities Act [15
U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. The offer or sale of
securities at issue in this case took place in this District, and certain acts, practices, transactions,
and courses of business constituting violations of the securities laws alleged herein occurred
within this District. At all relevant times in this case, Brda was CEO of Torchlight, which prior
to merging with Meta I was traded on the Nasdaq, which is headquartered in this District. As
further described in paragraphs 26-28 below, Meta I’s primary motivation for entering into the
merger at issue with Torchlight was to assume Torchlight’s Nasdaq listing. Following the
merger, Meta II has traded on the Nasdaq. One or more investors who bought Torchlight stock,
and were harmed by the conduct alleged herein, reside in this District. Defendants’ false and
misleading statements and omissions alleged in paragraphs 38-50 and 67-88 below—which were
made in press releases, public filings, and a recording circulated on social media—were
published and/or disseminated to investors in this District. Defendants’ deceptive marketing
efforts, through press releases and social media, alleged in paragraphs 52-54 and 62-66 below
were published and/or disseminated to investors in this District.
III. DEFENDANTS
15. Defendant John Brda is a resident of St. Louis, Missouri. Brda served as
Torchlight’s CEO from 2014 through its merger with Meta I on June 28, 2021. After the merger,
Brda held a consulting role with Meta II through late 2022. During the lead up to the merger,
Brda was one of only four employees of Torchlight. As CEO, he had ultimate authority to
approve Torchlight’s press releases, public filings, and proxy statements discussed herein.

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16. Defendant Georgios Palikaras is a Greek citizen and resident of Halifax, Nova
Scotia, Canada. From 2011 until the merger in June 2021, Palikaras was Meta I’s President and
CEO. Upon Meta II’s creation, Palikaras became President and CEO of Meta II and served on its
board of directors. In October 2023, Meta II terminated Palikaras as President and CEO, and he
resigned from Meta II’s Board.
IV. RELATED ENTITIES
17. Torchlight completed a reverse merger with Meta I in June 2021. Prior to the
merger, Torchlight was a publicly traded Texas corporation that was listed on the Nasdaq under
the ticker symbol “TRCH.” Its business was oil and gas exploration and production.
18. Meta I was a Canadian company listed on the Canadian Securities Exchange prior
to its June 2021 merger with Torchlight. Its business focused on research and development of
early-stage, applied materials technology.
19. Meta II is a Nevada corporation headquartered in Dartmouth, Nova Scotia,
Canada. Meta II was created on June 28, 2021, through the reverse merger between Torchlight
and Meta I. As a result of the merger, Meta II assumed Torchlight’s Nasdaq listing and now
trades under the ticker symbol “MMAT.” Like Meta I, Meta II’s business focuses on research
and development of early-stage, applied materials technology.
V. FACTS
A. With Torchlight Facing Serious  Financial  Distress,  Brda  Hatched A Scheme to
Manipulate The Price of Torchlight Stock And Capitalize On That Manipulation.
20. In early 2020, Torchlight was at a crossroads. It had sold all of its revenue-
generating oil and gas assets, leaving Torchlight with oil and gas leases on only a few early-
stage, exploratory properties. Torchlight’s primary remaining oil and gas asset, the Orogrande
Project, was undeveloped, had no proven oil and gas reserves, and covered significant areas of

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acreage far removed from existing proven geologic formations. Consequently, only a small
number of very large and/or specialized oil and gas companies were possible candidates to
purchase Torchlight’s Orogrande lease interests.
21. Torchlight required significant capital to maintain its lease interests in the
Orogrande project, which were not generating any revenues. The terms of Torchlight’s lease
obligated it to drill four wells in the Orogrande project before the end of 2021 and an additional
five wells in subsequent years.
2
 But Torchlight faced an uncertain oil and gas market that made
raising capital to pay ongoing drilling expenses challenging.
22. Torchlight also had significant ongoing debts to pay. In March 2020, Torchlight
disclosed, in its 2019 Form 10-K, $25 million in debt and other liabilities.  In contrast, Torchlight
had less than $1 million in non-oil-and-gas assets and minimal revenue. Torchlight’s debt
included millions of dollars of convertible promissory notes that Torchlight could avoid paying if
its noteholders opted to convert their notes to Torchlight common stock. However, that was
unlikely at the low price at which Torchlight common stock was trading in early 2020.
23. The market for Torchlight stock reflected the company’s deteriorating financial
condition. The price of Torchlight stock dropped below $1.00 per share in or around October
2019, prompting a delisting notice from Nasdaq that the company announced on November 25,
2019. The stock price continued to fluctuate beneath $1.00 per share during the first quarter of
2020, and the company reiterated its receipt of the delisting notice in its annual financial
statement filed March 16, 2020.
24. In addition, Brda believed that there was a significant volume of short interests in
Torchlight stock. In a June 2020 email, Brda wrote that “the short position” in Torchlight stock

2
 Torchlight’s drilling obligations for 2020 were suspended following outbreak of Covid-19.

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“is quite extensive.”
3
 In that same email, Brda expressed his belief that, through certain steps that
he proposed (as discussed below), Torchlight’s “short position...will be forced to cover,”  which
could trigger a short squeeze. A “short squeeze” refers to the pressure on short sellers to cover
their positions as a result of share price increases or difficulty in borrowing the security that the
sellers are short.
 A rush by short sellers to cover their positions produces additional upward
pressure on the price of the stock, which then can cause an even greater squeeze.
25. As CEO of Torchlight, Brda was aware of the conditions referenced in paragraphs
20-24 above and the predicament that Torchlight faced. But rather than take steps to improve
Torchlight’s underlying financial health, Brda hatched a plan to manipulate the price of
Torchlight stock and capitalize on that manipulation. Specifically, starting by at least June 2020,
Brda began developing the following plan:
• Find a merger partner who desired Torchlight’s Nasdaq listing but not its oil
and gas leases;
• As part of the merger structure, issue a dividend—in the form of preferred
stock issued to Torchlight stockholders of record at closing—that Torchlight
would not register or make available for immediate trading on any exchange
(i.e., the “Preferred Dividend,” defined in paragraph 3 above), ostensibly to
allocate proceeds from the sale of Torchlight’s oil and gas assets to legacy
Torchlight shareholders;

3
 A “short seller” sells stock that the short seller does not own (or that the short seller will borrow
for delivery) with the goal of repurchasing it or “covering” it later at a lower price. If the price of
the stock drops, short sellers buy the stock at the lower price and make a profit. If the price of the
stock rises, short sellers incur a loss in buying back the stock at a higher price than the price at
which it was sold.

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• Market and promote the Preferred Dividend to spread the narrative to select
investors that short sellers would not be able to obtain the Preferred Dividend,
thus pressuring short sellers to close their positions, leading investors to
believe a short squeeze would occur, and artificially inflating the price of
Torchlight common stock on a temporary basis;
• Capitalize on Torchlight’s inflated common stock price by, among other
things, raising capital through an ATM Offering; and
• Use capital raised through the ATM Offering to drill wells required to
maintain Torchlight’s oil and gas leases.
B. Brda Found A Merger Partner—Meta I And Its CEO, Palikaras—Willing To Help
Him Carry Out The Fraudulent Scheme.
26. To carry out his plan, Brda first sought a suitable merger partner. As further
discussed below, Brda’s plan to manipulate the market required a merger agreement between
Torchlight and another company that included a Preferred Dividend, which would purportedly
entitle its owners to receive the net proceeds of the sale of Torchlight’s remaining oil and gas
assets. For such a transaction structure to work, at minimum, Brda needed a merger partner that
was not interested in Torchlight’s oil and gas leases ( to provide an excuse to issue the Preferred
Dividend), but that nonetheless wanted to merge with Torchlight to acquire its Nasdaq listing—
Torchlight’s primary asset aside from its oil and gas leases.
27. Meta I, with Palikaras as its CEO, met Brda’s threshold criteria. Meta I was a
growing Canadian company listed on the Canadian Stock Exchange looking for an opportunity
to gain access to U.S. capital markets. Torchlight’s Nasdaq listing offered Meta I that
opportunity. At the same time, Meta I was an applied materials technology company; it was not
in the business of acquiring, developing, or selling oil and gas leases. Thus, although it wanted

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Torchlight’s Nasdaq listing, Meta I had no interest in Torchlight’s oil and gas leases, which were
not generating revenue and did not fit Meta I’s existing business or operations.
28. Beyond that initial threshold, Brda also sought a merger partner who would allow
Torchlight to structure and carry out the transactions and supporting sequence of events as Brda
planned. In that regard, Meta I’s CEO, Palikaras, went above and beyond what Brda needed, as
further described below.
C. Defendants Designed And Planned The Preferred Dividend In Furtherance Of The
Fraudulent Scheme.
29. The Preferred Dividend was the initial piece in Defendants’ scheme to manipulate
the price of Torchlight stock. Defendants believed, and intended to lead investors to believe, that
the Preferred Dividend would trigger a short squeeze in Torchlight stock, thus causing an
artificial and temporary increase in Torchlight’s stock price.
30. Brda took a number of steps towards designing and implementing a Preferred
Dividend that he intended to cause a short squeeze. Specifically, Brda: (1) conceived, designed,
and structured the Preferred Dividend in a manner that he intended to increase Torchlight’s stock
price by forcing shorts to cover; (2) as a member of Torchlight’s Board, voted to authorize the
transactions and other corporate matters necessary for Torchlight to issue the Preferred Dividend
pursuant to his design; (3) proposed the merger and Preferred Dividend to Meta I and then
negotiated and secured Meta I’s consent to the same; and (4) approved Torchlight’s proxy
statements, press releases, and public filings in furtherance of proposing the Preferred Dividend
to shareholders, soliciting and obtaining shareholder approval, and ensuring the scheme worked
as intended.
31. The design and structure of the Preferred Dividend that Brda devised, proposed,
and negotiated with Meta I included as follows.  First, the Preferred Dividend would provide

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holders of Torchlight common stock one share of preferred stock, purportedly entitling its owner
to receive the net proceeds of the sale of Torchlight’s remaining oil and gas assets. Second, only
the owners of record of Torchlight stock, as of a designated record date (the “Record Date”),
would be entitled to receive the Preferred Dividend. Third, after its issuance, the Preferred
Dividend would purportedly not be registered or made available for trading on any exchange.
More precisely, Torchlight’s definitive proxy statement dated May 7, 2021—which Brda
approved—stated: “[t]he Series A Preferred Stock will not be listed or traded on any exchange
and will not be registered, and will not be freely transferable unless such shares are thereafter
registered or are saleable pursuant to an applicable exemption from registration.” Similar
statements were made in each of Torchlight’s preliminary proxy statements, which Brda
approved. By this design, Brda intended to cause a short squeeze because of the difficulty he
believed short sellers would have in obtaining and delivering the Preferred Dividend (along with
the borrowed Torchlight stock) to lenders in the future.
32. By at least June 2020, Brda had conceived of and begun planning the Preferred
Dividend with the intent of causing a short squeeze. In June 2020, for example, he wrote to the
Chairman of Torchlight’s Board of Directors and its primary investment banker: “[b]y issuing a
Pref to [Torchlight] shareholders of record at closing, and announcing it as part of the [merger
agreement], the short position which is quite extensive will be forced to cover.”
33. In September 2020, Brda proposed the Preferred Dividend to Meta I and secured
Meta I’s initial consent via a letter-of-intent that Torchlight and Meta I announced on September
21, 2020. He subsequently negotiated and secured Meta I’s consent via a definitive agreement
that included the Preferred Dividend, which both companies announced on December 14, 2020.

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34. Brda also caused Torchlight to propose and solicit shareholder approval for his
intended structure of the Preferred Dividend. This includes, but is not limited to, the shareholder
approval that Brda solicited via Torchlight’s definitive proxy statement dated May 7, 2021—
which Brda approved—and Torchlight’s preliminary proxy statements—which Brda approved—
on February 4, 2021, March 23, 2021, and April 21, 2021.
35. Palikaras, as CEO of Meta I, shared Torchlight’s proposed merger structure,
including the plan to use the Preferred Dividend to impact short sellers, with Meta I’s Board.  In
Brda’s initial presentation to Meta I’s Board of Directors in September 2020—which Palikaras
knew about and helped convey to Meta I’s Board—Brda presented his plan to emphasize the
Preferred Dividend by using merger announcement press releases to “[p]lay up the [preferred
share] dividend to make sure the shorts understand their dilemma.” In Palikaras’ sworn
testimony given during the SEC’s investigation that preceded the filing of this lawsuit, Palikaras
admitted that Brda explained to him, “way back in the beginning that this deal could potentially
create a short squeeze.”
36. Meta I’s Board also communicated with Palikaras about Brda’s plan. In a
September 6, 2020 email, a member of Meta I’s board wrote the other members of Meta I’s
Board—including Palikaras—to summarize the proposed deal based on calls with Torchlight
management (including Brda). In that email, the Meta I board member wrote that a goal of the
merger structure was to “raise enough money when the shorts get squeezed to eliminate all
[Torchlight’s] debt.” He also wrote that Torchlight “currently has in place and approved an At-
The-Market (ATM) Offering,” and that “Torchlight’s plan is to use either their ATM, or do a
deal with a brokerage firm that they have a relationship with, to raise the capital” in the event of
a short squeeze and/or inflation in Torchlight’s stock price.

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37. Thus, at the outset of discussions between Torchlight and Meta I, Palikaras knew
about Brda’s plan and intent. As further described below, Palikaras actively worked with Brda to
carry out this plan to manipulate the price of Torchlight stock and defraud Torchlight investors.
D. Defendants Made Materially False And  Misleading  Statements  And  Omissions
Regarding Their Plans And Intent To Manipulate The Price Of Torchlight Stock.
38. Brda and Torchlight made several public disclosures about the Preferred
Dividend, but those disclosures were misleading—and in some instances, false—because Brda
omitted material information about the plan to use the Preferred Dividend to manipulate the price
of Torchlight stock and defraud investors.
39. Brda had ultimate authority to approve Torchlight’s May 7, 2021 definitive proxy
statement and its preliminary proxy statements dated February 4, 2021, March 23, 2021, and
April 21, 2021. Pursuant to that authority, Brda approved Torchlight’s definitive and preliminary
proxy statements. He also signed the cover letter to Torchlight’s definitive proxy statement. In
those proxy statements, Brda and Torchlight solicited shareholder approval for the merger and
Preferred Dividend. Brda and Torchlight publicly disclosed in those proxy statements, among
other things, the terms of, the purported reasons for, and the risks associated with the merger and
Preferred Dividend. Certain of these disclosures, however, were false or misleading, because
Brda knowingly or severely recklessly failed to disclose material information to investors.
40. Specifically, Brda failed to disclose, and failed to cause Torchlight to disclose, the
following in Torchlight’s proxy statements and other public filings and statements: (1) that the
Preferred Dividend was intended to cause, and to lead investors to believe, that there would be a
short squeeze and an increase in Torchlight’s stock price; (2) that Brda believed the Preferred
Dividend would cause a short squeeze and/or temporarily inflate Torchlight’s stock price;
(3) that the potential for a short squeeze and/or temporary inflation of Torchlight’s stock price

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were reasons that Brda and Torchlight considered in approving the merger and Preferred
Dividend and recommending that shareholders approve the same; (4) Brda’s plan to, and/or the
potential that Torchlight would, deploy the ATM Offering; and (5) that, in connection with
negotiations over the merger and Preferred Dividend, Torchlight and Meta I discussed the
Preferred Dividend’s potential to cause a short squeeze, its potential to temporarily inflate
Torchlight’s stock price, and Brda’s plan to use an ATM Offering to raise funds from investors.
41. To illustrate, Torchlight’s definitive proxy statement described the purported
“reasons” and “factors” that Torchlight’s board (including Brda) considered in both approving
the merger and Preferred Dividend and recommending that shareholders approve the same. The
proxy statement repeatedly states that the supposed “reason” for approving and proposing the
Preferred Dividend is that it “provides the current Torchlight stockholders an opportunity to
retain their beneficial interest in [Torchlight’s oil and gas assets].” These statements were false,
or at least misleading, because Brda and Torchlight failed to disclose in the proxy statement and
subsequent public filings that the reason—or at least a reason—that Torchlight and Brda
considered was Brda’s plan and intention for the Preferred Dividend to cause a short squeeze
and/or to temporarily increase Torchlight’s stock price.
42. Similarly, Torchlight’s definitive proxy statement also stated that “[t]he
anticipated and intended impact of the [Preferred Dividend] is to maintain the interest of the
Torchlight stockholders as of the [Preferred Dividend] Record Date in [Torchlight’s oil and gas
assets] after the consummation of the [merger].” (emphasis added). Again, this statement was
false, or at least misleading, because Brda and Torchlight failed to disclose in the proxy
statement or subsequent filings that an anticipated and intended impact of the Preferred Dividend
was that it would cause a short squeeze and/or temporarily increase Torchlight’s stock price.

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Brda also failed to disclose that he and Torchlight planned to conduct an ATM Offering to take
advantage of any squeeze or price inflation that took place. Contrary to Brda’s and Torchlight’s
representations that the Preferred Dividend was intended to protect the interests of Torchlight
legacy shareholders, the ATM Offering that they were planning in coordination with the
Preferred Dividend—which they failed to publicly disclose—would actually dilute those legacy
shareholders’ interests by injecting new, off-the-shelf shares into the market.
43. Torchlight’s definitive proxy statement also incorporated by reference certain
public filings that were “considered to be part of this proxy statement,” including its 2020 Form
10-K filed March 18, 2021, which Brda signed and approved. In that 2020 Form 10-K,
Torchlight disclosed generally that “[t]he market price of our common stock may be influenced
by many factors,” including among “many” other factors, “actual or purported ‘short-squeeze’
trading activity.” (emphasis added). However, this generic disclosure made no reference to the
Preferred Dividend or the intent or potential for the Preferred Dividend to cause a short squeeze.
Similarly, Torchlight’s definitive proxy statement disclosed several risks that the proposals
therein—including the proposed Preferred Dividend—posed to Torchlight and its shareholders.
At a minimum, these generic risk disclosures were misleading, because Brda and Torchlight
never disclosed in those filings or any subsequent filings the risk that the Preferred Dividend
could cause a short squeeze or artificial price increase, much less that the Preferred Dividend was
intended to cause the same. Nor did Torchlight or Brda disclose their intention to conduct an
ATM Offering to take advantage of the squeeze or price inflation.
44. Torchlight’s 2020 Form 10-K further represented to investors that “we have no
reason to believe our shares would be the target of a short squeeze.”  As Brda knew at the time,
however, that statement was false, as it was directly contrary to his and other executives’

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privately stated belief and intention that the Preferred Dividend would cause a short squeeze.  In
fact, a note-taker at an investor conference on March 17, 2021—the day before Torchlight filed
its 2020 Form 10-K—recorded Brda telling an investment firm: “15 things driving our stock
price, last thing before closing, is a short position, is hard to deliver dividend if short on closing.”
At a minimum, the representation was misleading, because Brda omitted from the 2020 Form 10-
K, proxy statements, and subsequent filings that he and other executives believed the Preferred
Dividend could cause a short squeeze or temporary increase in Torchlight’s stock, and the plan to
use the ATM Offering to take advantage of the squeeze or inflation in Torchlight’s stock price.
45. The definitive proxy statement also purported to detail the discussions and
negotiations between Meta I and Torchlight concerning the merger and Preferred Dividend,
along with each company’s purported motivations and reasons for the transactions. For example,
the proxy statement stated that Meta I “suggested that the parties structure the transaction so that
all of the value of [Torchlight’s oil and gas assets] would be allocated to legacy Torchlight
stockholders,” which Torchlight purportedly found “attractive” and beneficial to its legacy
shareholders. As Brda knew at the time, however, these statements and disclosures of Torchlight
and Meta I’s negotiations were misleading. In the proxy statements and subsequent public
filings, Brda and Torchlight never disclosed that they proposed the idea of a Preferred Dividend
that they intended to cause a short squeeze and/or artificial increase in Torchlight’s stock price.
In fact, Brda and Torchlight never disclosed in the proxy statement or other public filings that the
short squeeze was even discussed during those negotiations. In addition, the September 6, 2020
email from Meta I’s board member—discussed in paragraph 36 above—reveals that during
negotiations the two companies discussed: Brda’s short squeeze theory, Torchlight
management’s belief that Torchlight stock would increase following announcement of the

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Preferred Dividend, and the ATM Offering that Torchlight had available and planned to use to
take advantage of a squeeze or price inflation. Brda and Torchlight, however, never disclosed in
the proxy statement or other public filings that these discussions took place.
46. Brda knowingly or severely recklessly made these false and misleading
statements and omissions in furtherance of the scheme to manipulate the price of Torchlight
stock. As Brda knew or was severely reckless in not knowing, his false and misleading
statements and omissions were deceptive, furthered the fraudulent scheme, and concealed
Defendants’ scheme, plans, and intentions.
47. Palikaras was aware of each of the above false and misleading statements and
omissions by Brda and Torchlight. He also knew by September 2020—well before the false and
misleading statements and omissions in Torchlight’s 2020 Form 10-K and proxy statements—
about the undisclosed matters referenced in paragraphs 40-45 above. As further described in
paragraphs 59-66, 89-93, and 101-105 below, Palikaras also: (a) privately communicated with
select groups of investors and/or potential investors about how he believed the Preferred
Dividend would cause a short squeeze; (b) knew about a recording of certain of these private
communications circulating on social media; (c) indirectly promoted the short squeeze narrative
on social media; and (d) coordinated with Brda on these efforts to deceptively promote the short
squeeze and on execution of the ATM Offering.
48. In furtherance of the fraudulent scheme, however, Palikaras never disclosed in
any public filings or public statements—and never caused Meta I to publicly disclose—that:
(a) he engaged in the aforementioned private communications with select investor groups; (b) he
indirectly promoted the short squeeze on social media; (c) he believed the Preferred Dividend
would cause a short squeeze or had the potential to do so; (d) that Brda told him and Meta I’s

18

board that Brda believed the Preferred Dividend would cause a short squeeze or inflation of
Torchlight’s stock price; (e) Brda told him and Meta I’s board about plans to conduct an ATM
Offering to take advantage of a squeeze and/or price inflation; (f) he coordinated with Brda to
deceptively promote the short squeeze and on the execution of the ATM Offering; or (g) any of
the other undisclosed matters referenced in paragraphs 40-45 above.
49. As Palikaras knew or was severely reckless in not knowing, his omissions were
misleading and/or rendered Brda’s statements in Torchlight’s public filings discussed above false
and misleading. Palikaras also knew, or was severely reckless in not knowing, that his private
communications to select investors, indirect promotion of a short squeeze on social media, and
private coordination with Brda—while simultaneously failing to publicly disclose to the market
his aforementioned omissions—were deceptive, furthered the fraudulent scheme, and concealed
Defendants’ scheme, plans, and intentions.
50. Defendants’ communications suggest their intentions and motivations in refusing
to publicly disclose the planned short squeeze. For example, on June 7, 2021, an anonymous
Stocktwits user (“KingOneFolle”) posted about Palikaras’ statements on the “Italian Investor
Call,” which is discussed in paragraph 61 below. In that post, KingOneFolle posted a screenshot
from a recording of the call and a synopsis of four takeaways from Palikaras’ private statements
on the call, including the idea that Torchlight’s announcement of the Preferred Dividend Record
Date would “create a short squeeze as there are many short stocks to cover before the merger!!”
Within three minutes of the Stocktwits post, Palikaras emailed a screenshot of the post to Brda
and other members of Meta I’s management, angrily demanding that investor relations personnel
contact KingOneFolle and insist that the post and recording be deleted. Palikaras confided to

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Meta I’s CFO his concern that the deal would “blow up” if his private communications about the
short squeeze became public.
E. Defendants   Deceptively   Marketed   And   Promoted   The   Preferred   Dividend   In
Furtherance Of The Fraudulent Scheme.
51. In addition to concealing their scheme from the market through misstatements and
omissions, Defendants deceptively marketed and promoted the narrative that the Preferred
Dividend would cause a short squeeze in furtherance of their plan to artificially inflate
Torchlight’s stock price. As further described below, Defendants took steps to market and
promote the Preferred Dividend in ways that were intended to: (i) cause short sellers, in the
words of Brda, to “understand their dilemma” and trigger a short squeeze; and (ii) increase
interest and confidence among legacy and prospective Torchlight shareholders, as well as
convertible promissory note holders, in the anticipation of a potential short squeeze, increase in
Torchlight’s stock price relating to the Preferred Dividend, and/or a purportedly valuable
distribution from the Preferred Dividend.
52. Initially, Defendants believed that they could simply “play up” the Preferred
Dividend in press releases to trigger a short squeeze and/or inflate Torchlight’s stock price. In a
written presentation to Palikaras and Meta I’s board in September 2020, Brda proposed his plan
to emphasize the Preferred Dividend by using merger announcement press releases to “[p]lay up
the [preferred share] dividend to make sure the shorts understand their dilemma.”
53. Likewise, in the September 6, 2020 email from a Meta I board member—first
discussed in paragraph 36 above—that board member wrote to his fellow board members, based
on “two separate calls” that he and Palikaras had with Torchlight management (including Brda):
“Torchlight’s well thought out strategy...is to finalize an LOI with [Meta I]...and strategically
jointly announce it by way of a joint Press Release after the markets close.” The board member

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wrote that the joint press release “will announce that at closing of the transaction all current
shareholders of Torchlight will be issued an equivalent number of Pref Shares.” He also
explained that, per Brda/Torchlight’s strategy, if the two companies agreed on “when the Joint
Press Release goes out, the shorts will only have the weekend to come up with their own strategy
to cover their short positions.” He added that “Torchlight’s management [which included Brda]
is confident” that Torchlight’s stock price would go up following a press release playing up the
Preferred Dividend.
54. Consistent with this plan and proposal, Brda caused Torchlight to issue a press
release on September 21, 2020, announcing its merger with Meta I—which Brda participated in
drafting and was attached to Torchlight’s September 23, 2020 Form 8-K that Brda signed—that
emphasized in the release’s title: “Special Dividend Intended to be Issued to Torchlight
Shareholders at Closing.” Similarly, Torchlight’s December 14, 2020 press release—which Brda
participated in drafting and was attached to Torchlight’s December 14, 2020 Form 8-K that Brda
signed—announced Meta I and Torchlight’s definitive agreement to merge and highlighted in its
title: “Preferred Stock Dividend to be Issued to Torchlight Shareholders Prior to Closing.” As
demonstrated by the communications discussed in paragraphs 52-53 above, Brda deceptively
highlighted this one aspect of the merger transaction—the Preferred Dividend to be issued at
closing—with the intent of causing the shorts to exit their positions (i.e., “make sure the shorts
understand their dilemma”) and cause Torchlight’s stock price to artificially increase.
55. Following the September 21, 2020 press release announcing the merger and
emphasizing the Preferred Dividend, the market did not appear to immediately react the way the
Defendants intended. For example, Torchlight’s stock price continued to trade well below $1.00.
As a result, Brda turned to some consultants that he knew and previously worked with to spread

21

the short squeeze narrative for Torchlight. Brda caused Torchlight to pay these consultants to
communicate with current or potential Torchlight shareholders. Through these individuals—two
of whom Brda introduced to Palikaras as his “guys on stock support”—Brda communicated
information about the Preferred Dividend and short squeeze to shareholders.
56. For example, on September 21, 2020, Brda forwarded to two consultants
Torchlight’s press release announcing the merger and Preferred Dividend. As reflected in the
below exchange, Brda instructed the consultants on how they should message the Preferred
Dividend to investors:
Brda: We need your guys to embrace it. IMO, you get the [Torchlight] value up to $1 and
then the 25% of META is free. Lots of room to build a nice position.

Consultant: Agreed, Everyone I’ve spoke [sic] to today love it and are buying more and
are long term investors! TONS of volume but not moving up?

Brda: I think people don’t understand the dividend properly.

Consultant: I agree, I’m explaining it and I can hear the light come on while I’m talking
to people.

57. In January 2021, Brda emailed information about the outstanding short position in
Torchlight to the stock-support consultants and wrote: “ [w]e all knew [the shorts] would come
after us one more time. They are creating a massive bubble, IMO, that is going to slingshot in
our favor. The dividend is going to be a huge problem for them.” Through these and other
communications, Brda prompted Torchlight’s consultants to explain the Preferred Dividend and
its impact on short sellers to investors, without revealing that he and the company were driving
that message or disclosing his intention to take advantage of the eventual temporary price
inflation by selling Torchlight stock at inflated prices.
58. To further conceal his deceptive use of stock-support consultants, Brda caused
Torchlight to keep inadequate books and records and to maintain inadequate accounting controls

22

concerning these consultants. Other than generic contracts obligating the consultants to
“introduce” the company to potential investors, Brda caused Torchlight to keep no records
documenting why Torchlight paid the stock-support consultants $3,000 to $5,000 per month plus
stock warrants for their services.
59. Brda and Palikaras also deceptively had direct communications with select groups
of investors where they further played up the short squeeze in furtherance of their scheme.
60. For example, from March 16-18, 2021, Brda and Palikaras met with a series of
institutional investors as part of an investment bank’s virtual Annual Investor Conference.
During these meetings, Brda and Palikaras pitched the justification for the merger and described
to at least one investment firm the potential for the Preferred Dividend to cause a short squeeze.
A note-taker at the conference also recorded Brda telling an investment firm on March 17, 2021:

“15 things driving our stock price, last thing before closing, is a short position, is hard to deliver
dividend if short on closing.” Through these private communications, Defendants intended to
drive interest with these investors in the merger and in buying or retaining Torchlight stock,
without publicly disclosing their plan or belief that a short squeeze would occur.
61. As another example, on May 13, 2021, Palikaras participated in a virtual meeting
with a group of Italian shareholders (the “Italian Investor Call”) that he believed held a
significant number of shares of Torchlight common stock. During that meeting, Palikaras
described the plan to cause a short squeeze on several occasions, including in one instance:
And there is one more element to add here, which is the, let’s call the x-  factor. If
you notice the Torchlight stock is massively shorted ... This deal is set up not
to give a [cash] dividend at closing. So, in order for the short positions to cover,
they have to have the stock on their hand because the dividend will be paid out as
a preferred share, not cash. As a result, there is no physical way for the shorts to
cover the stock when the time to close, and we believe ... there will be a potential
jump towards the close, it’s called a short squeeze... (emphasis added).

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62. In addition, Palikaras and Brda used social media to tout the Preferred Dividend in
an indirect manner in furtherance of their market manipulation scheme.
63. For instance, on June 7, 2021—one week before Torchlight announced the
Preferred Dividend Record Date (as defined in paragraph 31 above)—Brda posted on Torchlight’s
Twitter account a video discussing short squeezes in the context of other stocks. After viewing the
tweet, Palikaras texted Brda, advising caution: “I don’t think you should be sharing posts on the
short squeeze... yet. Just my two cents. Once it happens that’s ok as it is fact, but before you are
putting yourself at risk for potentially speculative content.”
64. On June 13, 2021—the day before Torchlight announced its Preferred Dividend
Record Date—Palikaras tweeted a graphic of shorts-in-flames, kicking off a series of tweets
designed to promote the short squeeze theory and encourage investors to purchase Torchlight’s
common stock. A true and correct copy of this tweet is depicted below:

24

65. Palikaras testified during the SEC’s investigation that his tweet had nothing to do
with the concept of a short squeeze, but the timing, circumstances, and content of his tweet imply
that he intended to tout that the Preferred Dividend would set Torchlight’s “shorts” on fire by
triggering a short squeeze. The reaction of his Twitter followers also belies his testimony.
Palikaras’ tweet received several comments that made the connection clearly, including:
• “You should set the price of the shorts the price of TRCH at the end of the
short squeeze.”
•  “This is class!!!! burn the shorts”
• “We definitely get the reference “Shorts Are Getting Burner”” [sic]
•  “Need a solid PR this Monday ... flame those shorties...”
• “This week will be epic! Torch the shorts!”
66. Palikaras knew or had notice of these comments to his shorts-in-flame tweet. For
example, he later posted in response to his tweet, acknowledging that his tweet had over 500
likes in less than an hour. His communications also demonstrate that he was closely monitoring
engagement on Twitter around the time of these responses to his tweet. Yet, Palikaras did
nothing to disabuse the connection his followers on social media were drawing between his tweet
and the short squeeze.
F. Defendants Made False And Misleading Statements And Omissions Regarding The
Value Of The Preferred Dividend In Furtherance Of The Fraudulent Scheme.
67. As part of their scheme, Defendants also made false and misleading statements
and omissions in public filings and public statements to investors about the Preferred Dividend.
These misstatements and omissions created false impressions about the value of the Preferred
Dividend and the likelihood that holders of the Preferred Dividend would receive a distribution
of the “net proceeds” from the sale of Torchlight’s oil and gas assets. As further described below,

25

Defendants made these statements knowingly or with severe recklessness to induce investors to
buy or hold Torchlight common stock in furtherance of their fraudulent scheme.
i. Brda  made  false  and  misleading  statements  and  omissions  in  Torchlight’s  proxy
filings and Form 8-K filings about ongoing “commercially reasonable efforts” to sell
Torchlight’s oil and gas assets and plans to distribute “net proceeds” to holders of
the Preferred Dividend.

68. In Torchlight’s public filings leading up to the merger, Brda bolstered the
potential value of the Preferred Dividend through false and misleading statements and omissions.
Specifically, Brda misrepresented in Torchlight’s public filings that Torchlight would make
“commercially reasonable efforts” to sell its oil and gas assets and distribute the net proceeds to
holders of the Preferred Dividend within six months of the merger closing. Torchlight claimed
that if the efforts to sell were unsuccessful six months after the merger date, it would then
consider spinning off the assets. In reality, there were no prospects for selling Torchlight’s oil
and gas assets within six months of the merger closing, and Brda had started planning to spin off
the assets as soon the merger agreement was signed. His misrepresentations and omissions
created the false impression about the likelihood that Preferred Dividend holders would receive a
return on their investments in the form of a distribution of net proceeds from Torchlight’s sale of
its oil and gas assets shortly after the merger.
69. Brda, through Torchlight, first made this representation in Torchlight’s Form 8-K
dated September 23, 2020, announcing the merger, stating that the merged company of
Torchlight and Meta I would “use its commercially reasonable efforts to cause the Torchlight oil
and gas assets to be sold [within six months of the initial merger date]. Torchlight legacy
shareholders will be entitled to a special dividend distribution of any values attributable to the
sale of Torchlight’s existing oil and gas business assets (net of [certain debt and holdbacks]...).”

26

70. Brda repeated a similar version of these false and misleading statements in several
of Torchlight’s subsequent press releases and Forms 8-K, including most prominently in press
releases attached to Torchlight’s Forms 8-K filed on April 15, 2021, May 4, 2021, and June 16,
2021. Each of these public filings or press releases stated that Torchlight would distribute “net
proceeds” to shareholders who received the Preferred Dividend. A distribution of net proceeds
could only happen after Meta II (as successor-in-interest of Torchlight after the merger) made
efforts (and succeeded) in selling the oil and gas assets within six months of the merger closing.
71. As another example, in the press release announcing that Torchlight and Meta I
signed a definitive merger agreement, Torchlight’s Form 8-K dated December 14, 2020, stated:
“[f]ollowing the Reverse Split, and prior to the Effective Time, Torchlight will declare and issue
a dividend, on a one-for‐one basis, of shares of preferred stock to the holders of its common
stock. Following the Effective Time, the holders of preferred stock will be entitled to a dividend
based on the net proceeds of the sale of any assets that are used or held for use in Torchlight’s oil
and gas exploration business..., subject to certain holdbacks.”
72. In Torchlight’s proxy statements—which Brda approved—Torchlight repeated
the claim that it would make “commercially reasonable efforts” to sell the oil and gas assets. The
proxy statements also contained statements about the distribution of proceeds from the sale of
Torchlight’s oil and gas assets, as well as statements emphasizing that the Preferred Dividend
would not be registered or traded on any exchange (consistent with Brda’s plan to cause a short
squeeze and lead investors to believe a short squeeze would occur).
73. By way of example, Torchlight’s definitive proxy statement dated May 7, 2021,
contained the following false and misleading statements about “commercially reasonable efforts”

27

to sell the company’s oil and gas assets and a distribution that “may” be made to holders of the
Preferred Dividend:
The Arrangement Agreement provides that Torchlight and the Combined Company
will use commercially reasonable efforts to sell the O&G Assets [within six months
of  the  merger  closing].  Torchlight  stockholders  of  record  as  of  the  Series  A
Preferred Record Date, will receive a dividend, on a one-for-one basis, of shares of
Series  A  Preferred  Stock.... Holders  of  shares  of  Series  A  Preferred  Stock  may
receive  Asset  Sale  Dividends  from  any  Asset  Sale  Transactions  consummated
[within  six  months  of  the  merger  closing],  and  may  also  receive  a  Spin-Off
Dividend  of  any  Remaining  Assets  that  have  not  been  sold  in  an  Asset  Sale
Transaction [within six months of the merger closing].

74. These statements were made repeatedly in Torchlight’s proxy materials. The
company touted its “commercially reasonable efforts” to sell all of its oil and gas assets a half
dozen times in its May 7, 2021 definitive proxy statement and with similar frequency in its
preliminary proxy statements on February 4, 2021, March 23, 2021, and April 21, 2021.
75. These statements and representations made by Brda in Torchlight’s public filings,
proxy statements, and press releases were false and misleading at the time they were made. As
Brda knew or was reckless in not knowing, Torchlight had no prospects to sell the oil and gas
assets and had taken no actions to lay the groundwork for a sale when the statements were made.
Brda also knew that Torchlight had unsuccessfully tried to sell its largest oil and gas asset for
years. Due to the size and unproven state of Torchlight’s oil and gas assets, only a small number
of companies were possible candidates to purchase Torchlight’s assets, and Torchlight’s records
do not reflect any prospects or discussions with any such candidates in 2020 or 2021. Likewise,
during the SEC’s investigation, neither Torchlight nor Brda could identify any specific prospects
that the company had discussions with to sell its oil and gas leases in 2020 or 2021.
76. Without any identified buyers or ongoing negotiations, Brda knew, or was
severely reckless in not knowing, that a sale of Torchlight’s oil and gas assets within six months

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of the merger closing was not possible. As Brda knew or was severely recklessly in not knowing,
it would take at least a year, if not longer, simply to complete the due diligence that a specialized
buyer would undertake before completing a sale of Torchlight’s assets.
77. In addition, Brda knowingly or severely recklessly omitted material facts and
information that were necessary in order to make his statements in Torchlight’s public filings
referenced in paragraphs 68-74 not misleading. Among other things, Brda failed to disclose that,
at the time of his above-referenced statements, Torchlight had no specific prospects or candidates
to buy its largest oil and gas assets, that Torchlight had unsuccessfully tried to sell those asset for
years, that Torchlight had no plans in place to use “commercially reasonable efforts” to complete
the sale of its assets within six months of the merger closing, or that a sale of those assets within
six months of the merger closing was not possible given the lack of prospects or candidates.
78. Brda also knowingly or severely recklessly failed to disclose that he had laid the
foundation for a spin-off of Torchlight’s oil and gas assets into a new entity as early as
December 2020—mere days after the definitive agreement for the merger between Torchlight
and Meta I was signed. In particular, beginning in December 2020, Brda circulated to
Torchlight’s Chairman and other insiders presentations outlining capital formation plans for a
spin-off entity (the “Spin-Off Entity”). He did not publicly disclose these plans.
79. Additionally, Brda knowingly or severely recklessly failed to disclose that,
starting in January 2021, he caused Torchlight to begin secretly paying $20,000 a month to
individuals who would form the initial management team of the Spin-Off Entity. To conceal his
plans, Brda caused Torchlight to make these monthly payments through an intermediary who
received “consulting fees” for doing no actual work. He further caused Torchlight to keep
inadequate books and records, and/or caused it to maintain insufficient controls, to document

29

why Torchlight was making these monthly payments to this intermediary. Brda did not publicly
disclose these payments or his fully-formed spin-off plans before the merger closing.
80. By August 2021—just six weeks after the merger closed—Brda sent the post-
merger Meta II Board a fully-formed plan to abandon all of its so-called “ efforts” to sell the
assets and, instead, to spin off the assets into the Spin-Off Entity—which had the same name as
the Spin-Off Entity that Brda identified in his presentation to Torchlight’s board back in
December 2020—with a specific management team that Brda and Torchlight had been paying
clandestinely through an intermediary since January 2021. Consistent with Brda’s
recommendation, by August 17, 2021—less than 60 days after the merger closed—Meta II’s
Board voted to “discontinue” any so-called “effort” to sell the assets and, instead, to drill wells
required to maintain the leases, with a goal of spinning off the assets into a separate company as
soon as possible.
81. Thus, Brda knew, or was severely reckless in not knowing, that no “commercially
reasonable efforts” would be undertaken to sell Torchlight’s assets, that the assets could not be
sold within six months of the merger closing, and that no distribution from such a sale would
occur. And he knowingly or severely recklessly made false and misleading statements and
omissions to the contrary in furtherance of his scheme to manipulate Torchlight’s stock price.
ii. Palikaras made false statements about the value of the Preferred Dividend.

82. On May 13, 2021, Palikaras participated in the Italian Investor Call, as described
and alleged in paragraph 61 above. Palikaras believed that the investors on the Italian Investor
Call held a significant number of shares of Torchlight common stock. The stated purposes of the
Italian Investor Call were to: (a) solicit the Italian shareholders’ proxy votes in favor of the
merger between Torchlight and Meta I, and (b) encourage the investors to hold the common

30

stock of the post-merger company. During the Italian Investor Call, as discussed in paragraphs
83-88 below, Palikaras made false and misleading statements regarding at least two topics.
83. First, Palikaras claimed that Torchlight was speaking to “the right potential
buyers” and that the buyers were “top tier.”  However, as Palikaras knew or was severely reckless
in not knowing, Torchlight had not identified any potential buyers. In fact, Palikaras admitted in
sworn testimony during the SEC’s investigation that, at the time he made the statement, he had
no knowledge of potential buyers or active negotiations.
84. Second, Palikaras claimed that, based on “the analysis,” the value of the Preferred
Dividend could be between $1–$20 per share.
85. As Palikaras knew or was severely reckless in not knowing, the $1–$20 per share
range that he identified was wholly unsupported. Likewise, there was no “analysis” supporting
his statement. Indeed, by the time he made this statement, he had reviewed the investment bank’s
third-party asset valuation, which implied an estimated asset value of less than $1.00 per share.
Palikaras’ reference to an “analysis” also gave investors the misleading impression that his value
range was supportable, when it was not.
86. By at least June 11, 2021, a partial audio recording of the Italian Investor Call had
been posted to social media, which included Palikaras’ false and misleading statements
referenced above. Palikaras’ statements quickly became a topic of discussion on social media in
the days leading up to the merger closing. A common refrain on social media was that the
company’s post-merger CEO (Palikaras) estimated that the Preferred Dividend would be worth
$20 per share. Palikaras and Brda were aware of the discussions on social media and the
existence of the recording, but neither one made any effort to correct or clarify Palikaras’

31

misstatements that, at that time, they knew, or were severely reckless in not knowing, were
materially false or misleading and that investors were relying on.
87. After the merger, Meta II’s VP of Business Development emailed Palikaras and
other members of the Meta II management team about an investor complaint citing the $1–$20
dividend range. Meta II’s VP of Business Development stated plainly, “[t]he dividend was never
going to be worth more than $1... The math was not difficult prior to the merger: value of O&G
assets / number of pre-existing TRCH shares.” In other words, as Meta II’s VP of Business
Development confirmed, Palikaras’ $1–$20 estimate never had any basis in fact.
88. Defendants’ false and misleading statements gave investors the false impression
that Torchlight had made some progress toward selling its oil and gas assets, and that Meta II
would be able to quickly monetize Torchlight’s oil and gas assets and distribute the net proceeds
to shareholders post-merger. This false impression incentivized investors to acquire or hold
Torchlight common stock through the Record Date to be eligible to receive the Preferred
Dividend. Torchlight legacy shareholders who believed Defendants’ misrepresentations about
the value of the Preferred Dividend were incentivized not to sell before the Record Date, and
thus, missed the opportunity to sell when Torchlight’s stock price increased leading up to the
merger. In turn, this false impression furthered Defendants’ scheme to manipulate the market by
artificially inflating the value of Torchlight’s stock.
G. Defendants Succeeded I n Manipulating The Price Of Torchlight Stock.
89. As a result of their fraudulent scheme and through the use of false and misleading
statements and omissions, Defendants artificially inflated the price of Torchlight stock in the
days and weeks leading up to the merger closing in June 2021.
90. On June 14, 2021—just a day after Palikaras made his “shorts-in-flames” tweet
mentioned in paragraph 64 above—Torchlight issued a press release announcing the Preferred

32

Dividend Record Date of June 24, 2021. That same day, Palikaras issued a tweet, linking the
press release and stating: “[n]ice release by $TRCH, the dividend [record] date is 06/24 (ten day
notice required), there is a T plus 2 rule so last chance to be in @TRCHEnergy is Tuesday 06/22
end of day.”
4
 Posts and content from other users on social media on or around June 14–22, 2021
show that investors following news about Torchlight and/or Meta I understood Palikaras’ tweet
to mean that the key to obtaining the benefits of the short squeeze and the Preferred Dividend—
which Palikaras had led investors to believe was worth $1–$20 per share—was to buy or hold
Torchlight stock through June 22, 2021 (the T+2 Date).
91. As Defendants intended, users on Twitter, Stocktwits, YouTube, Reddit, and
other social media platforms discussed the merger, the Preferred Dividend, and the short squeeze
in the days leading up to the merger and Record Date.
92. On June 14, 2021, Brda sent Palikaras an image of an online campaign promoting
the short squeeze theory using the hashtag “#TORCHDAY.” An anonymous user created a
graphic that conveyed the precise message that Defendants privately hoped to spread: “Post and
educate people about our short squeeze ... #TORCHDAY” and “Post and educate people about
our dividend ranging from $1 - $20 (deadline 06/22).” The graphic went on to explain
“[Torchlight] is a heavily shorted stock, and due to the fact a preferred share dividend is being
granted to stockholders SHORTS HAVE TO COVER which can lead to a short squeeze of the
stock.” The Torch Day graphic also explicitly referenced Palikaras’ “shorts-in-flames” tweet
from the day before.

4
 The “T plus 2 rule” mentioned in Palikaras’ tweet is the rule, in place at the time, under which
the settlement cycle—the time between the transaction date and the settlement date—for most
securities transactions was two business days. Thus, per this rule, investors generally had to
either hold or place an order to buy Torchlight stock by June 22, 2021 (“T+2 Date”) to ensure
they were Torchlight shareholders of record as of the June 24, 2021 Record Date.

33

93. Social media users posted the hashtag and versions of the graphic dozens of times
over a few days around June 14-16, 2021. And users on many other social-media platforms
picked up on the basic gist of the scheme to promote purchasing Torchlight common stock to
benefit from the supposed short squeeze by June 22 (the T+2 Date), using other hashtags,
subreddits, and iterations discussing the Preferred Dividend, the Record Date, the expected $1–
$20 dividend, and the short squeeze.
94. The trading volume of Torchlight stock dramatically surged as the merger
approached. In May 2021, the average trading volume was 5 million shares per day. But,
between the announcement of the Record Date on June 14, 2021 and the T+2 Date (June 22,
2021), the average trading volume exceeded 80 million shares per day.
95. Likewise, following the announcement of the Record Date on June 14, 2021, the
price of Torchlight stock surged. The price at closing jumped from $3.58 per share on June 14 to
$5.07 per share on June 15 to $5.99 per share on June 16. Torchlight stock price peaked at
$10.88 per share on June 21—an increase of over 200% from its price at closing on June 14.
96. Torchlight’s stock price artificially increased as a result of Defendants’ scheme.
However, the evidence available at this time is inconclusive as to whether, or to what extent, the
trading volume was attributable to short sellers covering their positions versus defrauded
investors purchasing Torchlight’s stock to “burn the shorts” or obtain the Preferred Dividend that
they believed was worth $1–$20.
97. Regardless, at the time that Torchlight’s stock price was surging in June 2021,
Brda and Palikaras believed that a short squeeze was driving the surge. For example, as further
discussed in paragraph 104 below, on June 18, 2021—after Torchlight’s stock price began to
increase—Brda told Palikaras that they needed “to take advantage of the squeeze,” which they

34

did through an ATM Offering that they had discussed and planned as early as September 2020.
Through their deceptive marketing and promotion discussed in paragraphs 51-66 above,
Defendants also led retail and other investors to believe that a short squeeze would occur and
drive the surge in Torchlight’s stock price. Also, the aim of Defendants’ scheme was to
manipulate the market by artificially increasing Torchlight’s stock price. Defendants achieved
that aim when Torchlight’s stock price suddenly and temporarily surged in June 2021 as a result
of Defendants’ plans and intent to manipulate the price of Torchlight stock. And as discussed
below, Defendants achieved the other aim of their scheme through an ATM Offering conducted
at the height of their price manipulation.
H. Brda Deployed An ATM Offering To Capitalize On The Fraudulent Scheme.
98. Upon successfully manipulating the market for Torchlight common stock, Brda
set in motion the next phase of the scheme: the ATM Offering. His plan— which was not
disclosed in any public filings or statements—sought to capitalize on what he knew or expected
to be a temporary artificial increase in Torchlight’s stock price.
99. Before executing the ATM Offering, Brda sought a formal agreement from Meta I
to use some of the funds raised by the ATM Offering toward drilling oil wells to maintain
Torchlight’s oil and gas leases. In an email to Palikaras dated June 16, 2021, Brda wrote:
“We  have  the  ATM  that  will  be  in  play  by  Thursday  morning...  up  to  $100  Million...
Raising  money  prior  to  the  dividend  record  date,  IMO,  is  the  best  way  to  get  maximum
money  and  at  the  best  price...  I  believe  I  can  get  my  board  to  approve  if  META  would
agree to lend a decent portion of the raise to [Torchlight]... Say 20% of the amount raised...
Otherwise,  we  have  no  inclination  to  raise  capital  now  as  it  only  dilutes  our  oil  and  gas
assets further.... The ducks are quacking, time to feed them!” (emphasis added).
100. Although Palikaras knew from the outset of negotiations about Brda’s plan to use
an ATM Offering to capitalize on their scheme to manipulate the price of Torchlight stock—as
discussed, among other places, in paragraph 36 above— Brda waited to make this request to use

35

funds from the ATM Offering to pay Torchlight’s drilling expenses until June 16, 2021—less
than ten days before the Torchlight-Meta I merger was set to close. At that point in time, Brda
had leverage over Palikaras and Meta I, who stood to reap the benefit of the ATM Offering for
Meta II’s post-merger operations.
101. Palikaras and Meta I’s CFO recommended to Meta I’s Board that they take the
deal proposed by Brda, writing on or around June 18, 2021: “all [Meta I’s advisers] strongly
recommended we take as much of the money as we can ahead of the closing.” And while the
ATM Offering would be “[d]ilutive to Torchlight [common and preferred] shareholders, before
Ex-Dividend date however it also takes advantage of the potential best pricing due to any short
covering effect prior to the Ex-Date.” (emphasis added).
102. Despite Palikaras’ recommendation, Meta I did not formally agree to Brda’s
demands. Nonetheless, Torchlight ultimately did vote to proceed with the ATM Offering, and
later Meta II entered into an agreement post-merger to fund the drilling for the oil and gas
assets—consistent with Brda’s original plan and scheme.
103. More importantly, Brda and Torchlight went forward with the ATM Offering as
Defendants had planned while Torchlight’s stock price was at its height. Specifically, Brda
caused Torchlight, through an investment bank, to commence the ATM Offering starting on June
18, 2021—just days after the June 14 announcement of the Record Date.
104. Brda intended the ATM Offering to capitalize on Defendants’ price manipulation.
On June 18, 2021—after the ATM Offering had commenced—Brda wrote Palikaras: “[w]e need
to be selling more than we are, the shorts always push down at the end of the day... We have two
days to take advantage of the squeeze, today should have been a 5 million share day at 6[.]”
(emphasis added).

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105. Palikaras knew about and agreed with Brda’s plan to use the ATM Offering to
capitalize on their market manipulation efforts. On June 16, 2021—as Torchlight’s stock price
continued to rise following the June 14 announcement of the Record Date—Palikaras wrote Brda
to express his agreement with taking advantage of the inflated value of Torchlight’s stock: “[t]o
the moon! We are happy to take $100-200m at a 20% PREMIUM TO THE MARKET and a
minimum of $7 whatever is largest.” Then, on June 18, 2021, in response to Brda’s above-cited
message that “[w]e have two days to take advantage of the squeeze” through the ATM Offering,
Palikaras wrote Brda: “Go ahead to $5.75. 5m shares. Fill her up[.]”
106. Ultimately, Torchlight, through an investment bank, conducted the ATM Offering
over a five-day period between Friday, June 18, 2021, and Thursday, June 24, 2021. In the
middle of that offering period, on June 21, 2021, Torchlight’s stock price reached a record high
of $10.88 per share and closed at $9.92 per share.  Overall, Torchlight sold 16.2 million shares
during the ATM Offering at an average price of $8.50 per share. Over 95% of that volume was
sold prior to the T+2 Date. In total, Torchlight raised $137.5 million through the ATM Offering.
107. Torchlight’s stock price fell dramatically after the T+2 Date and Torchlight’s
completion of the ATM Offering. On June 22, 2021, the T+2 Date, the stock closed at $7.00 per
share. By June 25th—after Torchlight had completed its ATM Offering—the stock had dropped
to $4.95 per share at closing. The following Monday (June 28, 2021), after Torchlight announced
a 2-for-1 reverse stock split and the completion of its merger with Meta I, the company’s new
ticker (MMAT) closed at $3.98 per share (after accounting for the reverse split, less than half its
prior-day closing price). Investors who purchased or held Torchlight common stock during the
course of Defendants’ fraudulent scheme suffered pecuniary harm.

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I. Brda Profited From The Fraudulent Scheme.
108. Brda profited off his fraudulent scheme and false and misleading statements to
investors.
109. On June 24, 2021, immediately after the ATM Offering and one day before the
merger closed, Brda urged Torchlight’s Compensation Committee to award him a $1.5 million
bonus. He presented the Committee with a “Top Ten + 2 Reasons to Pay Bonus to John Brda,”
which touted his achievements in conceiving and executing the Torchlight-Meta I merger. He
specifically pointed out that he “[m]anaged the entire merger process with [Meta I] leading to a
market cap increase from $30 million to nearly $1.44 billion.” He also wrote that he
“[c]onceived the timing of the shareholder meeting with windows to raise additional equity and
filing of the shelf S3 for $240 million along with the ATM–raising full amount of $133 million
on ATM.” He explained that he “[h]andled all investor calls and fund calls during the process.”
For these reasons, Brda requested a “bonus of $1.5 million in cash.”
110. Meta II paid Brda the $1.5 million bonus in two $750,000 increments—half
before closing on June 25, 2021, and the other half after the merger closed.
111. Brda received his $1.5 million bonus as a result of the funds he raised through his
market manipulation scheme and his false and misleading statements and omissions. Had he not
engaged in this fraudulent scheme, he would not have received the bonus. Indeed, to his request
to the Compensation Committee, Brda attached a spreadsheet reflecting Torchlight’s remaining
obligations, which makes clear that the company would not have sufficient funds to pay a $1.5
million bonus or its existing obligations, but for the proceeds of the ATM Offering.

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VI. CLAIMS FOR RELIEF
FIRST CLAIM FOR RELIEF
Violations of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]
(Against All Defendants)
112. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if
fully set forth hereunder.
113. Between at least June 2020 and June 25, 2021, Defendants planned and
perpetrated a scheme to manipulate the market by artificially increasing the price of Torchlight’s
stock on a temporary basis and capitalizing on that artificial increase through the ATM Offering.
As further described and alleged in paragraphs 20-107 above, Defendants knowingly and/or
severely recklessly engaged in deceptive and/or manipulative acts in furtherance of the
fraudulent scheme.
114. Defendants also knowingly and/or severely recklessly made false and misleading
statements or omissions of material fact, as further described and alleged in paragraphs 38-50
and 67-88 above.
115. By engaging in the acts and conduct alleged herein, Defendants, directly or
indirectly, in the offer or sale of securities, by the use of the means or instruments of
transportation or communication in interstate commerce or by use of the mails, have:
• employed a device, scheme, or artifice to defraud; and/or
• obtained money or property by means of an untrue statement of a material fact
or an omission to state a material fact necessary in order to make the
statements made, in light of the circumstances under which they were made,
not misleading; and/or

39

• engaged in a transaction, practice, or course of business which operated or
would operate as a fraud or deceit upon the purchaser.
116. With regard to the violations of Section 17(a)(1), Defendants acted with scienter
and engaged in the referenced acts knowingly and/or with severe recklessness.  With regard to
the violations of Sections 17(a)(2) and 17(a)(3), Defendants acted at least negligently.
117. By reason of the foregoing, Defendants have violated, and unless enjoined will
continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)].
SECOND CLAIM FOR RELIEF
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)]
and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5]
(Against All Defendants)
118. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if
fully set forth hereunder.
119. Between at least June 2020 and June 25, 2021, Defendants planned and
perpetrated a scheme to manipulate the market by artificially increasing the price of Torchlight’s
stock on a temporary basis and capitalizing on that artificial increase through the ATM Offering.
As further described and alleged in paragraphs 20-107 above, Defendants knowingly and/or
severely recklessly engaged in deceptive and/or manipulative acts in furtherance of the
fraudulent scheme.
120. Defendants also knowingly and/or severely recklessly made false and misleading
statements or omissions of material fact, as further described and alleged in paragraphs 38-50
and 67-88 above.
121. By engaging in the acts and conduct alleged herein, Defendants, directly or
indirectly, singly or in concert with others, in connection with the purchase or sale of securities,

40

by the use of any means or instrumentality of interstate commerce, or of the mails or of any
facility of any national securities exchange:
• employed a device, scheme, or artifice to defraud; and/or
• made untrue statements of material facts, or omitted to state material facts
necessary in order to make the statements made, in light of the circumstances
under which they were made, not misleading; and/or
• engaged in acts, practices, or courses of business which operated, or would
operate, as a fraud or deceit upon any person.
122. With regard to the violations of Section 10(b) and Rule 10b-5, Defendants acted
with scienter and engaged in the referenced acts knowingly and/or with severe recklessness.
123. By reason of the foregoing, Defendants have violated, and unless enjoined will
continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5
thereunder [17 C.F.R. § 240.10b-5].
THIRD CLAIM FOR RELIEF
Violations of Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)]
and Rule 14a-9 thereunder [17 C.F.R. § 240.14a-9]
(Against All Defendants)
124. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if
fully set forth hereunder.
125. As further described and alleged in paragraphs 39-46 and 67-81 above,
Torchlight’s proxy statements contained false or misleading statements and/or omissions of
material fact. Brda solicited and/or permitted the use of his name to solicit shareholder approval
via the proxy statements containing false or misleading statements or omissions of material fact.

41

126. As further described and alleged in paragraphs 82-88 above, Palikaras  solicited
shareholder approval by means of the oral and/or written communications during the Italian
Investor Call that contained statements that, at the time and in the light of the circumstances
under which those statements were made, were false or misleading with respect to a material
fact, and/or that omitted to state a material fact necessary in order to make the statements therein
not false or misleading or necessary to correct any statement in any earlier communication with
respect to the solicitation of a proxy for the same meeting or subject matter which became false
or misleading.
127. By engaging in the acts and conduct alleged herein, each Defendant, directly or
indirectly, singly or in concert with others, by the use of the mails or by any means or
instrumentality of interstate commerce or of any facility of any national securities exchange or
otherwise, solicited and/or permitted the use of his name to solicit a proxy or consent or
authorization with respect of securities; and such solicitation was made by means of a proxy
statement or other communication, written or oral, that contained false or misleading statements
with respect to a material fact and/or omitted to state a material fact necessary in order to make
the statements therein not false or misleading or necessary to correct any statement in any earlier
communication with respect to the solicitation of a proxy for the same meeting or subject matter
which has become false or misleading, in violation of Section 14(a) of the Exchange Act and
Rule 14a-9 thereunder.
128. With regard to the violations of Section 14(a) and Rule 14a-9, Defendants acted at
least negligently.

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129.  By reason of the foregoing, Defendants have violated, and unless enjoined will
continue to violate, Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)] and Rule 14a-9
thereunder [17 C.F.R. § 240.14a-9].
FOURTH CLAIM FOR RELIEF
Aiding and Abetting Meta II’s Violations of Section 13(a) of the Exchange Act [15 U.S.C.
§§ 78m(a)] and Rules 12b-20 and 13a-11 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-11]
(Against Brda)
130. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if
fully set forth hereunder.
131. At the time of the conduct alleged herein, including the statements, omissions,
and periodic securities filings described above, Torchlight was an issuer of securities registered
under Section 12 of the Exchange Act that filed required reports with the SEC under Section
13(a) of the Exchange Act and related rules and regulations. Torchlight subsequently merged
with Meta I to become Meta II.
132. As further described and alleged in paragraphs 67-71 and 75-81 above, Torchlight
made untrue statements of material fact without adding such further material information as may
be necessary to make the statements not misleading in its periodic securities filings, including
but not limited to the false and/or misleading statements and/or omissions in its press releases
attached to its Forms 8-K filed with the SEC on December 14, 2020, April 15, 2021, May 4,
2021, and June 16, 2021.
133. As further described and alleged in paragraphs 15, 67-71, and 75-81 above, Brda
knew or was severely reckless in not knowing that Torchlight’s periodic securities filings,
including but not limited to its press releases attached to its Forms 8-K filed with the SEC on
December 14, 2020, April 15, 2021, May 4, 2021, and June 16, 2021, contained untrue
statements of material fact without adding such further material information as may be necessary

43

to make statements not misleading in its periodic securities filings. Brda also, among other
things, signed, approved, drafted or helped draft, and caused Torchlight to file such press
releases and/or periodic securities filings.
134. By engaging in the acts and conduct alleged herein, Meta II—as the successor-in-
interest of Torchlight—violated Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11
thereunder. Meta II has consented to the entry of the SEC’s Order Instituting Cease-and-Desist
Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the
Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order
(“OIP”), finding that Meta II violated Section 13(a) of the Exchange Act and Rules 12b-20 and
13a-11 thereunder.
135. By engaging in the acts and conduct alleged herein, Brda aided and abetted Meta
II’s violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder by
knowingly or recklessly providing substantial assistance to Meta II in violating Section 13(a) of
the Exchange Act and Rules 12b-20 and 13a-11 thereunder.
136. By reason of the foregoing, Brda, directly or indirectly, aided and abetted, and
unless enjoined will continue to aid and abet—and/or should be restrained from further aiding
and abetting—violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11.
FIFTH CLAIM FOR RELIEF
Aiding and Abetting Meta II’s Violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the
Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)]
(Against Brda)
137. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if
fully set forth hereunder.
138. As further described and alleged in paragraphs 55-58 and 78-80, Meta II (then
Torchlight) failed to implement internal accounting controls and maintain adequate books and

44

records by failing to account properly for the disposition of corporate assets or recognition of
legitimate expenses through a series of payments made to stock-support consultants who
rendered services to the company without sufficient documentation.
139. As further described and alleged in paragraphs55-58 and 78-80, Meta II (then
Torchlight) also failed to implement internal accounting controls and maintain adequate books
and records by failing to account properly for the disposition of corporate assets or recognition of
legitimate expenses through a series of payments made to an intermediary
 who received
“consulting fees” without documentation reflecting the services this intermediary purportedly
provided (such fees were ultimately paid by the intermediary to individuals who would form the
initial management team of the Spin-Off Entity, but Torchlight did not maintain records
reflecting the same). During the SEC’s investigation, Meta II failed to provide documents or
information to SEC staff describing Torchlight’s internal accounting controls related to payments
to consultants. If Torchlight had such internal accounting controls, they were either insufficiently
devised or maintained to account properly for Torchlight’s disposition of assets or recognition of
expenses.
140. Torchlight’s stock support consultants, and the consultant used to funnel $20,000
per month to the Spin-Off Entity management, provided no evidence to Torchlight of services
rendered other than generic consulting contracts. This expense represented a substantial portion
of Torchlight’s overall expenses in the first half of 2021.
141. By engaging in the acts and conduct alleged herein, Meta II—as the successor-in-
interest of Torchlight—violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.
Meta II has consented to the entry of the SEC’s OIP, finding that Meta II violated Section
13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.

45

142. By engaging in the acts and conduct alleged herein, Brda aided and abetted Meta
II’s violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act by knowingly or
recklessly providing substantial assistance to Meta II in violating Sections 13(b)(2)(A) and
13(b)(2)(B) of the Exchange Act.
143. By reason of the foregoing, Brda, directly or indirectly, aided and abetted, and
unless enjoined will continue to aid and abet—and/or should be restrained from further aiding
and abetting—violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.
VII. PRAYER FOR RELIEF
144. WHEREFORE, the SEC respectfully requests that this Court enter a Final
Judgment:
• Permanently restraining and enjoining Defendant Brda from violating,
directly or indirectly, Section 17(a) of the Securities Act and Sections 10(b) and 14(a) of the
Exchange Act and Rules 10b-5 and 14a-9 thereunder, and from aiding and abetting future
violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20
and 13a-11 thereunder;
• Permanently restraining and enjoining Defendant Palikaras from violating,
directly or indirectly, Section 17(a) of the Securities Act and Sections 10(b) and 14(a) of the
Exchange Act and Rules 10b-5 and 14a-9 thereunder;
• Permanently barring each Defendant, pursuant to Section 20(e) of the
Securities Act and Section 21(d)(2) of the Exchange Act, from acting or serving as an officer or
director of any issuer that has a class of securities registered pursuant to Section 12 of the
Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act;

46

• Permanently restraining and enjoining each Defendant from directly or
indirectly, including but not limited to, through any entity owned or controlled by him,
participating in the issuance, purchase, offer, or sale of any security, provided, however, that
such injunction shall not prevent him from purchasing or selling securities for his own personal
account;
• Ordering Defendant Brda to disgorge all ill-gotten gains received as a
result of the violations alleged herein, together with pre-judgment interest thereon, pursuant to
the Court’s equitable powers and Sections 21(d)(3), 21(d)(5), and 21(d)(7) of the Exchange Act
[15 U.S.C. §§ 78u(d)(3), (5), and (7)];
•  Ordering each Defendant to pay civil penalties pursuant to Section 20(d)
of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C.
§ 78u(d)(3)]; and
• Granting such other and further relief as this Court may deem appropriate,
just, equitable, and/or necessary.
VIII. JURY DEMAND

145. The SEC demands trial by jury in this action on all issues so triable.
Dated:  June 25, 2024    Respectfully submitted,

/s/ Patrick Disbennett
     Patrick Disbennett (pro hac vice application pending)
Christopher Rogers (pro hac vice application pending)

U.S. Securities and Exchange Commission
801 Cherry Street, Suite 1900
Fort Worth, Texas 76102
Tel: 817-978-3821
[email protected]
[email protected]

UNITED STATES DISTRICT COURT 
SOUTHERN DISTRICT OF NEW YORK 

SECURITIES AND EXCHANGE COMMISSION, 

   Plaintiff, 

 v. 

JOHN BRDA, 
GEORGIOS PALIKARAS, 
 

 Defendants.  
 

 

 
         
         Civ. Action No. 1:24-cv-004806 

    JURY TRIAL DEMANDED 

 

COMPLAINT 

The Securities and Exchange Commission (“SEC”) files this Complaint against John 

Brda (“Brda”) and Georgios Palikaras (“Palikaras”) (together, “Defendants”), and alleges as 

follows: 

I. SUMMARY  

1. Defendants engaged in a fraudulent scheme to manipulate the price of Torchlight 

Energy Resources, Inc. (“Torchlight”) stock and sell Torchlight stock to investors at inflated 

prices. Defendants’ scheme artificially inflated the price of Torchlight stock in June 2021, 

causing the price to increase by over 200% in a single week. Defendants capitalized on their 

scheme by causing Torchlight to conduct an at-the-market offering (“ATM Offering”) at the 

peak of their price manipulation, selling 16.2 million shares at inflated prices.   

2. Brda, as CEO of Torchlight, first devised the scheme in early 2020 in response to 

Torchlight’s deteriorating financial condition. Torchlight’s stock was trading below $1.00 per 

share at the time, and Torchlight needed capital to pay its significant debt obligations and to fund 

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2 
 

ongoing drilling expenses of its oil and gas assets. Brda hatched a plan to artificially inflate the 

price of Torchlight’s stock and raise capital by selling Torchlight shares at inflated prices.  

3. To accomplish his plan, Brda devised a series of transactions intended to create a 

short squeeze. Those transactions included a merger agreement between Torchlight and another 

company, along with a dividend—in the form of preferred stock issued to shareholders of record 

at closing—that Torchlight would not register or make available for immediate trading on any 

exchange (“Preferred Dividend”).1 Shareholders who received the Preferred Dividend would 

purportedly be entitled to receive the net proceeds of the sale of Torchlight’s oil and gas assets. 

Brda believed, and intended to lead investors to believe, that the Preferred Dividend would force 

short sellers to exit their positions and trigger a short squeeze that would inflate the price of 

Torchlight’s publicly traded stock.  

4. As the first step in his plan, Brda sought a suitable merger partner. He found that 

partner in Palikaras, the CEO of Metamaterial, Inc. (“Meta I”). Brda told Palikaras about the 

scheme at the outset of negotiations. Palikaras fully embraced and participated in the scheme.  

5. Brda and Palikaras initially believed that merely announcing the Preferred 

Dividend in a press release accompanying the merger’s announcement would cause a short 

squeeze and a resulting surge in Torchlight’s stock price. But when the market did not appear to 

immediately react following that announcement, Defendants took further action and deceptively 

promoted the Preferred Dividend in hopes of spreading their short squeeze narrative and, 

consequently, increasing Torchlight’s stock price. They did so through, among other means, 

private communications with select investors and third-party consultants, who they intended to 

 
1 Unless specified otherwise, the term “Preferred Dividend” used in the Complaint generally 
refers to the corporate dividend and/or the preferred stock issued pursuant to that dividend.  

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3 
 

spread the message for them. Without publicly revealing that they were the source of the short 

squeeze narrative or fully disclosing their intent or plan, Defendants intended their deceptive 

promotional efforts to artificially inflate the price of Torchlight stock by: (i) causing short sellers 

to exit their short positions, and (ii) enticing other investors to acquire or hold Torchlight stock.  

6. As part of their scheme, Defendants also made false and misleading statements 

and omissions to investors about the Preferred Dividend to further inflate the value of Torchlight 

stock. In Torchlight’s public filings and proxy statements, Brda made false and misleading 

statements and omissions that were intended to create the false impression that Torchlight’s oil 

and gas assets would be quickly monetized and distributed to Preferred Dividend holders within 

six months of the merger, when in fact there were no prospects of that happening. Similarly, 

Palikaras made statements to a group of investors—which were recorded and later circulated and 

widely cited on social media—that the net proceeds payable to Preferred Dividend holders could 

range between $1–$20 per share, which had no basis in fact. Palikaras also told that same group 

of investors that Torchlight was speaking to “the right potential buyers” and that they were “top 

tier,” when in fact Torchlight had not identified any potential buyers at the time.  

7. Defendants succeeded in their aim to manipulate the price of Torchlight stock in 

the days leading up to the merger closing. Before the merger was announced, Torchlight stock 

was trading below $1.00 per share. As a result of Defendants’ scheme, Torchlight’s stock price 

sharply rose during a ten-day period—between June 14–24, 2021—from $3.58 per share to as 

high as $10.88 per share before dropping back to $4.95 per share by June 25, 2021.  

8. When Torchlight’s stock price began to surge, Brda wrote Palikaras: “We have 

two days to take advantage of the squeeze[.]” (emphasis added). Between June 18–24, 2021, 

Brda caused Torchlight to sell off-the-shelf shares into the public markets in an ATM Offering. 

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Over the five-day ATM Offering, Torchlight sold 16.2 million shares to investors at an average 

price of $8.50 per share. In total, the ATM Offering raised $137.5 million from investors. These 

proceeds primarily benefitted the company that resulted from the Torchlight-Meta I merger—

Meta Materials, Inc. (“Meta II”)—which appointed Palikaras as CEO. And for his part, Brda 

demanded and received a $1.5 million bonus. 

9. By engaging in the acts and conduct alleged herein, Defendants violated Section 

17(a) of the Securities Act of 1933 (“Securities Act”) and Sections 10(b) and 14(a) of the 

Securities Exchange Act of 1934 (“Exchange Act”) and Rules 10b-5 and 14a-9 thereunder. Brda 

also aided and abetted Meta II’s violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the 

Exchange Act and Rules 12b-20 and 13a-11 thereunder.  

10. For Defendants’ violations, the SEC seeks: (i) permanent injunctive relief against 

both Defendants; (ii) an officer and director bar against both Defendants; (iii) disgorgement of 

ill-gotten gains and prejudgment interest thereon against Brda; (iv) civil penalties against both 

Defendants; and (v) such further relief as the Court may deem just and appropriate.  

II. JURISDICTION AND VENUE 

11. The SEC brings this action pursuant to the authority conferred upon it by Sections 

20(b) and 20(d) of the Securities Act [15 U.S.C. §§ 77t(b) and 77t(d)] and Sections 21(d) and 

21(e) of the Exchange Act [15 U.S.C. §§ 78u(d) and 78u(e)]. 

12. This Court has jurisdiction over this action pursuant to Sections 20 and 22(a) of 

the Securities Act [15 U.S.C. §§ 77t and 77v(a)] and Sections 21(d), 21(e), and 27 of the 

Exchange Act [15 U.S.C. §§ 78u(d), (e), and 78aa]. 

13. Defendants, directly or indirectly, made use of the mails or means or 

instrumentalities of interstate commerce, and/or made use of the mails or means or instruments 

of transportation or communication, or of facilities of a national securities exchange in interstate 

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commerce, in connection with the acts, practices, transactions, and courses of business alleged in 

this Complaint. 

14. Venue is proper in this District pursuant to Section 22(a) of the Securities Act [15 

U.S.C. § 77v(a)] and Section 27 of the Exchange Act [15 U.S.C. § 78aa]. The offer or sale of 

securities at issue in this case took place in this District, and certain acts, practices, transactions, 

and courses of business constituting violations of the securities laws alleged herein occurred 

within this District. At all relevant times in this case, Brda was CEO of Torchlight, which prior 

to merging with Meta I was traded on the Nasdaq, which is headquartered in this District. As 

further described in paragraphs 26-28 below, Meta I’s primary motivation for entering into the 

merger at issue with Torchlight was to assume Torchlight’s Nasdaq listing. Following the 

merger, Meta II has traded on the Nasdaq. One or more investors who bought Torchlight stock, 

and were harmed by the conduct alleged herein, reside in this District. Defendants’ false and 

misleading statements and omissions alleged in paragraphs 38-50 and 67-88 below—which were 

made in press releases, public filings, and a recording circulated on social media—were 

published and/or disseminated to investors in this District. Defendants’ deceptive marketing 

efforts, through press releases and social media, alleged in paragraphs 52-54 and 62-66 below 

were published and/or disseminated to investors in this District.  

III. DEFENDANTS 

15. Defendant John Brda is a resident of St. Louis, Missouri. Brda served as 

Torchlight’s CEO from 2014 through its merger with Meta I on June 28, 2021. After the merger, 

Brda held a consulting role with Meta II through late 2022. During the lead up to the merger, 

Brda was one of only four employees of Torchlight. As CEO, he had ultimate authority to 

approve Torchlight’s press releases, public filings, and proxy statements discussed herein.   

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16. Defendant Georgios Palikaras is a Greek citizen and resident of Halifax, Nova 

Scotia, Canada. From 2011 until the merger in June 2021, Palikaras was Meta I’s President and 

CEO. Upon Meta II’s creation, Palikaras became President and CEO of Meta II and served on its 

board of directors. In October 2023, Meta II terminated Palikaras as President and CEO, and he 

resigned from Meta II’s Board.  

IV. RELATED ENTITIES 

17. Torchlight completed a reverse merger with Meta I in June 2021. Prior to the 

merger, Torchlight was a publicly traded Texas corporation that was listed on the Nasdaq under 

the ticker symbol “TRCH.” Its business was oil and gas exploration and production.  

18. Meta I was a Canadian company listed on the Canadian Securities Exchange prior 

to its June 2021 merger with Torchlight. Its business focused on research and development of 

early-stage, applied materials technology.  

19. Meta II is a Nevada corporation headquartered in Dartmouth, Nova Scotia, 

Canada. Meta II was created on June 28, 2021, through the reverse merger between Torchlight 

and Meta I. As a result of the merger, Meta II assumed Torchlight’s Nasdaq listing and now 

trades under the ticker symbol “MMAT.” Like Meta I, Meta II’s business focuses on research 

and development of early-stage, applied materials technology. 

V. FACTS 

A. With Torchlight Facing Serious Financial Distress, Brda Hatched A Scheme to 
Manipulate The Price of Torchlight Stock And Capitalize On That Manipulation.  

20. In early 2020, Torchlight was at a crossroads. It had sold all of its revenue-

generating oil and gas assets, leaving Torchlight with oil and gas leases on only a few early-

stage, exploratory properties. Torchlight’s primary remaining oil and gas asset, the Orogrande 

Project, was undeveloped, had no proven oil and gas reserves, and covered significant areas of 

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acreage far removed from existing proven geologic formations. Consequently, only a small 

number of very large and/or specialized oil and gas companies were possible candidates to 

purchase Torchlight’s Orogrande lease interests.  

21. Torchlight required significant capital to maintain its lease interests in the 

Orogrande project, which were not generating any revenues. The terms of Torchlight’s lease 

obligated it to drill four wells in the Orogrande project before the end of 2021 and an additional 

five wells in subsequent years.2 But Torchlight faced an uncertain oil and gas market that made 

raising capital to pay ongoing drilling expenses challenging.  

22. Torchlight also had significant ongoing debts to pay. In March 2020, Torchlight 

disclosed, in its 2019 Form 10-K, $25 million in debt and other liabilities. In contrast, Torchlight 

had less than $1 million in non-oil-and-gas assets and minimal revenue. Torchlight’s debt 

included millions of dollars of convertible promissory notes that Torchlight could avoid paying if 

its noteholders opted to convert their notes to Torchlight common stock. However, that was 

unlikely at the low price at which Torchlight common stock was trading in early 2020.  

23. The market for Torchlight stock reflected the company’s deteriorating financial 

condition. The price of Torchlight stock dropped below $1.00 per share in or around October 

2019, prompting a delisting notice from Nasdaq that the company announced on November 25, 

2019. The stock price continued to fluctuate beneath $1.00 per share during the first quarter of 

2020, and the company reiterated its receipt of the delisting notice in its annual financial 

statement filed March 16, 2020.  

24. In addition, Brda believed that there was a significant volume of short interests in 

Torchlight stock. In a June 2020 email, Brda wrote that “the short position” in Torchlight stock 

 
2 Torchlight’s drilling obligations for 2020 were suspended following outbreak of Covid-19.  

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“is quite extensive.”3 In that same email, Brda expressed his belief that, through certain steps that 

he proposed (as discussed below), Torchlight’s “short position…will be forced to cover,” which 

could trigger a short squeeze. A “short squeeze” refers to the pressure on short sellers to cover 

their positions as a result of share price increases or difficulty in borrowing the security that the 

sellers are short. A rush by short sellers to cover their positions produces additional upward 

pressure on the price of the stock, which then can cause an even greater squeeze. 

25. As CEO of Torchlight, Brda was aware of the conditions referenced in paragraphs 

20-24 above and the predicament that Torchlight faced. But rather than take steps to improve 

Torchlight’s underlying financial health, Brda hatched a plan to manipulate the price of 

Torchlight stock and capitalize on that manipulation. Specifically, starting by at least June 2020, 

Brda began developing the following plan:   

• Find a merger partner who desired Torchlight’s Nasdaq listing but not its oil 

and gas leases; 

• As part of the merger structure, issue a dividend—in the form of preferred 

stock issued to Torchlight stockholders of record at closing—that Torchlight 

would not register or make available for immediate trading on any exchange 

(i.e., the “Preferred Dividend,” defined in paragraph 3 above), ostensibly to 

allocate proceeds from the sale of Torchlight’s oil and gas assets to legacy 

Torchlight shareholders; 

 
3 A “short seller” sells stock that the short seller does not own (or that the short seller will borrow 
for delivery) with the goal of repurchasing it or “covering” it later at a lower price. If the price of 
the stock drops, short sellers buy the stock at the lower price and make a profit. If the price of the 
stock rises, short sellers incur a loss in buying back the stock at a higher price than the price at 
which it was sold.   

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• Market and promote the Preferred Dividend to spread the narrative to select 

investors that short sellers would not be able to obtain the Preferred Dividend, 

thus pressuring short sellers to close their positions, leading investors to 

believe a short squeeze would occur, and artificially inflating the price of 

Torchlight common stock on a temporary basis; 

• Capitalize on Torchlight’s inflated common stock price by, among other 

things, raising capital through an ATM Offering; and 

• Use capital raised through the ATM Offering to drill wells required to 

maintain Torchlight’s oil and gas leases. 

B. Brda Found A Merger Partner—Meta I And Its CEO, Palikaras—Willing To Help 
Him Carry Out The Fraudulent Scheme.  

26. To carry out his plan, Brda first sought a suitable merger partner. As further 

discussed below, Brda’s plan to manipulate the market required a merger agreement between 

Torchlight and another company that included a Preferred Dividend, which would purportedly 

entitle its owners to receive the net proceeds of the sale of Torchlight’s remaining oil and gas 

assets. For such a transaction structure to work, at minimum, Brda needed a merger partner that 

was not interested in Torchlight’s oil and gas leases (to provide an excuse to issue the Preferred 

Dividend), but that nonetheless wanted to merge with Torchlight to acquire its Nasdaq listing—

Torchlight’s primary asset aside from its oil and gas leases.  

27. Meta I, with Palikaras as its CEO, met Brda’s threshold criteria. Meta I was a 

growing Canadian company listed on the Canadian Stock Exchange looking for an opportunity 

to gain access to U.S. capital markets. Torchlight’s Nasdaq listing offered Meta I that 

opportunity. At the same time, Meta I was an applied materials technology company; it was not 

in the business of acquiring, developing, or selling oil and gas leases. Thus, although it wanted 

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Torchlight’s Nasdaq listing, Meta I had no interest in Torchlight’s oil and gas leases, which were 

not generating revenue and did not fit Meta I’s existing business or operations.  

28. Beyond that initial threshold, Brda also sought a merger partner who would allow 

Torchlight to structure and carry out the transactions and supporting sequence of events as Brda 

planned. In that regard, Meta I’s CEO, Palikaras, went above and beyond what Brda needed, as 

further described below.  

C. Defendants Designed And Planned The Preferred Dividend In Furtherance Of The 
Fraudulent Scheme.  

29. The Preferred Dividend was the initial piece in Defendants’ scheme to manipulate 

the price of Torchlight stock. Defendants believed, and intended to lead investors to believe, that 

the Preferred Dividend would trigger a short squeeze in Torchlight stock, thus causing an 

artificial and temporary increase in Torchlight’s stock price.  

30. Brda took a number of steps towards designing and implementing a Preferred 

Dividend that he intended to cause a short squeeze. Specifically, Brda: (1) conceived, designed, 

and structured the Preferred Dividend in a manner that he intended to increase Torchlight’s stock 

price by forcing shorts to cover; (2) as a member of Torchlight’s Board, voted to authorize the 

transactions and other corporate matters necessary for Torchlight to issue the Preferred Dividend 

pursuant to his design; (3) proposed the merger and Preferred Dividend to Meta I and then 

negotiated and secured Meta I’s consent to the same; and (4) approved Torchlight’s proxy 

statements, press releases, and public filings in furtherance of proposing the Preferred Dividend 

to shareholders, soliciting and obtaining shareholder approval, and ensuring the scheme worked 

as intended.  

31. The design and structure of the Preferred Dividend that Brda devised, proposed, 

and negotiated with Meta I included as follows. First, the Preferred Dividend would provide 

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holders of Torchlight common stock one share of preferred stock, purportedly entitling its owner 

to receive the net proceeds of the sale of Torchlight’s remaining oil and gas assets. Second, only 

the owners of record of Torchlight stock, as of a designated record date (the “Record Date”), 

would be entitled to receive the Preferred Dividend. Third, after its issuance, the Preferred 

Dividend would purportedly not be registered or made available for trading on any exchange. 

More precisely, Torchlight’s definitive proxy statement dated May 7, 2021—which Brda 

approved—stated: “[t]he Series A Preferred Stock will not be listed or traded on any exchange 

and will not be registered, and will not be freely transferable unless such shares are thereafter 

registered or are saleable pursuant to an applicable exemption from registration.” Similar 

statements were made in each of Torchlight’s preliminary proxy statements, which Brda 

approved. By this design, Brda intended to cause a short squeeze because of the difficulty he 

believed short sellers would have in obtaining and delivering the Preferred Dividend (along with 

the borrowed Torchlight stock) to lenders in the future.   

32. By at least June 2020, Brda had conceived of and begun planning the Preferred 

Dividend with the intent of causing a short squeeze. In June 2020, for example, he wrote to the 

Chairman of Torchlight’s Board of Directors and its primary investment banker: “[b]y issuing a 

Pref to [Torchlight] shareholders of record at closing, and announcing it as part of the [merger 

agreement], the short position which is quite extensive will be forced to cover.”   

33. In September 2020, Brda proposed the Preferred Dividend to Meta I and secured 

Meta I’s initial consent via a letter-of-intent that Torchlight and Meta I announced on September 

21, 2020. He subsequently negotiated and secured Meta I’s consent via a definitive agreement 

that included the Preferred Dividend, which both companies announced on December 14, 2020.  

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34. Brda also caused Torchlight to propose and solicit shareholder approval for his 

intended structure of the Preferred Dividend. This includes, but is not limited to, the shareholder 

approval that Brda solicited via Torchlight’s definitive proxy statement dated May 7, 2021—

which Brda approved—and Torchlight’s preliminary proxy statements—which Brda approved—

on February 4, 2021, March 23, 2021, and April 21, 2021.  

35. Palikaras, as CEO of Meta I, shared Torchlight’s proposed merger structure, 

including the plan to use the Preferred Dividend to impact short sellers, with Meta I’s Board. In 

Brda’s initial presentation to Meta I’s Board of Directors in September 2020—which Palikaras 

knew about and helped convey to Meta I’s Board—Brda presented his plan to emphasize the 

Preferred Dividend by using merger announcement press releases to “[p]lay up the [preferred 

share] dividend to make sure the shorts understand their dilemma.” In Palikaras’ sworn 

testimony given during the SEC’s investigation that preceded the filing of this lawsuit, Palikaras 

admitted that Brda explained to him, “way back in the beginning that this deal could potentially 

create a short squeeze.”  

36. Meta I’s Board also communicated with Palikaras about Brda’s plan. In a 

September 6, 2020 email, a member of Meta I’s board wrote the other members of Meta I’s 

Board—including Palikaras—to summarize the proposed deal based on calls with Torchlight 

management (including Brda). In that email, the Meta I board member wrote that a goal of the 

merger structure was to “raise enough money when the shorts get squeezed to eliminate all 

[Torchlight’s] debt.” He also wrote that Torchlight “currently has in place and approved an At-

The-Market (ATM) Offering,” and that “Torchlight’s plan is to use either their ATM, or do a 

deal with a brokerage firm that they have a relationship with, to raise the capital” in the event of 

a short squeeze and/or inflation in Torchlight’s stock price.   

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37. Thus, at the outset of discussions between Torchlight and Meta I, Palikaras knew 

about Brda’s plan and intent. As further described below, Palikaras actively worked with Brda to 

carry out this plan to manipulate the price of Torchlight stock and defraud Torchlight investors.  

D. Defendants Made Materially False And Misleading Statements And Omissions 
Regarding Their Plans And Intent To Manipulate The Price Of Torchlight Stock. 

38. Brda and Torchlight made several public disclosures about the Preferred 

Dividend, but those disclosures were misleading—and in some instances, false—because Brda 

omitted material information about the plan to use the Preferred Dividend to manipulate the price 

of Torchlight stock and defraud investors.    

39. Brda had ultimate authority to approve Torchlight’s May 7, 2021 definitive proxy 

statement and its preliminary proxy statements dated February 4, 2021, March 23, 2021, and 

April 21, 2021. Pursuant to that authority, Brda approved Torchlight’s definitive and preliminary 

proxy statements. He also signed the cover letter to Torchlight’s definitive proxy statement. In 

those proxy statements, Brda and Torchlight solicited shareholder approval for the merger and 

Preferred Dividend. Brda and Torchlight publicly disclosed in those proxy statements, among 

other things, the terms of, the purported reasons for, and the risks associated with the merger and 

Preferred Dividend. Certain of these disclosures, however, were false or misleading, because 

Brda knowingly or severely recklessly failed to disclose material information to investors. 

40. Specifically, Brda failed to disclose, and failed to cause Torchlight to disclose, the 

following in Torchlight’s proxy statements and other public filings and statements: (1) that the 

Preferred Dividend was intended to cause, and to lead investors to believe, that there would be a 

short squeeze and an increase in Torchlight’s stock price; (2) that Brda believed the Preferred 

Dividend would cause a short squeeze and/or temporarily inflate Torchlight’s stock price; 

(3) that the potential for a short squeeze and/or temporary inflation of Torchlight’s stock price 

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were reasons that Brda and Torchlight considered in approving the merger and Preferred 

Dividend and recommending that shareholders approve the same; (4) Brda’s plan to, and/or the 

potential that Torchlight would, deploy the ATM Offering; and (5) that, in connection with 

negotiations over the merger and Preferred Dividend, Torchlight and Meta I discussed the 

Preferred Dividend’s potential to cause a short squeeze, its potential to temporarily inflate 

Torchlight’s stock price, and Brda’s plan to use an ATM Offering to raise funds from investors. 

41. To illustrate, Torchlight’s definitive proxy statement described the purported 

“reasons” and “factors” that Torchlight’s board (including Brda) considered in both approving 

the merger and Preferred Dividend and recommending that shareholders approve the same. The 

proxy statement repeatedly states that the supposed “reason” for approving and proposing the 

Preferred Dividend is that it “provides the current Torchlight stockholders an opportunity to 

retain their beneficial interest in [Torchlight’s oil and gas assets].” These statements were false, 

or at least misleading, because Brda and Torchlight failed to disclose in the proxy statement and 

subsequent public filings that the reason—or at least a reason—that Torchlight and Brda 

considered was Brda’s plan and intention for the Preferred Dividend to cause a short squeeze 

and/or to temporarily increase Torchlight’s stock price.  

42. Similarly, Torchlight’s definitive proxy statement also stated that “[t]he 

anticipated and intended impact of the [Preferred Dividend] is to maintain the interest of the 

Torchlight stockholders as of the [Preferred Dividend] Record Date in [Torchlight’s oil and gas 

assets] after the consummation of the [merger].” (emphasis added). Again, this statement was 

false, or at least misleading, because Brda and Torchlight failed to disclose in the proxy 

statement or subsequent filings that an anticipated and intended impact of the Preferred Dividend 

was that it would cause a short squeeze and/or temporarily increase Torchlight’s stock price. 

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Brda also failed to disclose that he and Torchlight planned to conduct an ATM Offering to take 

advantage of any squeeze or price inflation that took place. Contrary to Brda’s and Torchlight’s 

representations that the Preferred Dividend was intended to protect the interests of Torchlight 

legacy shareholders, the ATM Offering that they were planning in coordination with the 

Preferred Dividend—which they failed to publicly disclose—would actually dilute those legacy 

shareholders’ interests by injecting new, off-the-shelf shares into the market.  

43. Torchlight’s definitive proxy statement also incorporated by reference certain 

public filings that were “considered to be part of this proxy statement,” including its 2020 Form 

10-K filed March 18, 2021, which Brda signed and approved. In that 2020 Form 10-K, 

Torchlight disclosed generally that “[t]he market price of our common stock may be influenced 

by many factors,” including among “many” other factors, “actual or purported ‘short-squeeze’ 

trading activity.” (emphasis added). However, this generic disclosure made no reference to the 

Preferred Dividend or the intent or potential for the Preferred Dividend to cause a short squeeze. 

Similarly, Torchlight’s definitive proxy statement disclosed several risks that the proposals 

therein—including the proposed Preferred Dividend—posed to Torchlight and its shareholders. 

At a minimum, these generic risk disclosures were misleading, because Brda and Torchlight 

never disclosed in those filings or any subsequent filings the risk that the Preferred Dividend 

could cause a short squeeze or artificial price increase, much less that the Preferred Dividend was 

intended to cause the same. Nor did Torchlight or Brda disclose their intention to conduct an 

ATM Offering to take advantage of the squeeze or price inflation.  

44. Torchlight’s 2020 Form 10-K further represented to investors that “we have no 

reason to believe our shares would be the target of a short squeeze.” As Brda knew at the time, 

however, that statement was false, as it was directly contrary to his and other executives’ 

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privately stated belief and intention that the Preferred Dividend would cause a short squeeze. In 

fact, a note-taker at an investor conference on March 17, 2021—the day before Torchlight filed 

its 2020 Form 10-K—recorded Brda telling an investment firm: “15 things driving our stock 

price, last thing before closing, is a short position, is hard to deliver dividend if short on closing.” 

At a minimum, the representation was misleading, because Brda omitted from the 2020 Form 10-

K, proxy statements, and subsequent filings that he and other executives believed the Preferred 

Dividend could cause a short squeeze or temporary increase in Torchlight’s stock, and the plan to 

use the ATM Offering to take advantage of the squeeze or inflation in Torchlight’s stock price.      

45. The definitive proxy statement also purported to detail the discussions and 

negotiations between Meta I and Torchlight concerning the merger and Preferred Dividend, 

along with each company’s purported motivations and reasons for the transactions. For example, 

the proxy statement stated that Meta I “suggested that the parties structure the transaction so that 

all of the value of [Torchlight’s oil and gas assets] would be allocated to legacy Torchlight 

stockholders,” which Torchlight purportedly found “attractive” and beneficial to its legacy 

shareholders. As Brda knew at the time, however, these statements and disclosures of Torchlight 

and Meta I’s negotiations were misleading. In the proxy statements and subsequent public 

filings, Brda and Torchlight never disclosed that they proposed the idea of a Preferred Dividend 

that they intended to cause a short squeeze and/or artificial increase in Torchlight’s stock price. 

In fact, Brda and Torchlight never disclosed in the proxy statement or other public filings that the 

short squeeze was even discussed during those negotiations. In addition, the September 6, 2020 

email from Meta I’s board member—discussed in paragraph 36 above—reveals that during 

negotiations the two companies discussed: Brda’s short squeeze theory, Torchlight 

management’s belief that Torchlight stock would increase following announcement of the 

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Preferred Dividend, and the ATM Offering that Torchlight had available and planned to use to 

take advantage of a squeeze or price inflation. Brda and Torchlight, however, never disclosed in 

the proxy statement or other public filings that these discussions took place.  

46. Brda knowingly or severely recklessly made these false and misleading 

statements and omissions in furtherance of the scheme to manipulate the price of Torchlight 

stock. As Brda knew or was severely reckless in not knowing, his false and misleading 

statements and omissions were deceptive, furthered the fraudulent scheme, and concealed 

Defendants’ scheme, plans, and intentions.  

47. Palikaras was aware of each of the above false and misleading statements and 

omissions by Brda and Torchlight. He also knew by September 2020—well before the false and 

misleading statements and omissions in Torchlight’s 2020 Form 10-K and proxy statements—

about the undisclosed matters referenced in paragraphs 40-45 above. As further described in 

paragraphs 59-66, 89-93, and 101-105 below, Palikaras also: (a) privately communicated with 

select groups of investors and/or potential investors about how he believed the Preferred 

Dividend would cause a short squeeze; (b) knew about a recording of certain of these private 

communications circulating on social media; (c) indirectly promoted the short squeeze narrative 

on social media; and (d) coordinated with Brda on these efforts to deceptively promote the short 

squeeze and on execution of the ATM Offering.  

48. In furtherance of the fraudulent scheme, however, Palikaras never disclosed in 

any public filings or public statements—and never caused Meta I to publicly disclose—that: 

(a) he engaged in the aforementioned private communications with select investor groups; (b) he 

indirectly promoted the short squeeze on social media; (c) he believed the Preferred Dividend 

would cause a short squeeze or had the potential to do so; (d) that Brda told him and Meta I’s 

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board that Brda believed the Preferred Dividend would cause a short squeeze or inflation of 

Torchlight’s stock price; (e) Brda told him and Meta I’s board about plans to conduct an ATM 

Offering to take advantage of a squeeze and/or price inflation; (f) he coordinated with Brda to 

deceptively promote the short squeeze and on the execution of the ATM Offering; or (g) any of 

the other undisclosed matters referenced in paragraphs 40-45 above.  

49. As Palikaras knew or was severely reckless in not knowing, his omissions were 

misleading and/or rendered Brda’s statements in Torchlight’s public filings discussed above false 

and misleading. Palikaras also knew, or was severely reckless in not knowing, that his private 

communications to select investors, indirect promotion of a short squeeze on social media, and 

private coordination with Brda—while simultaneously failing to publicly disclose to the market 

his aforementioned omissions—were deceptive, furthered the fraudulent scheme, and concealed 

Defendants’ scheme, plans, and intentions.  

50. Defendants’ communications suggest their intentions and motivations in refusing 

to publicly disclose the planned short squeeze. For example, on June 7, 2021, an anonymous 

Stocktwits user (“KingOneFolle”) posted about Palikaras’ statements on the “Italian Investor 

Call,” which is discussed in paragraph 61 below. In that post, KingOneFolle posted a screenshot 

from a recording of the call and a synopsis of four takeaways from Palikaras’ private statements 

on the call, including the idea that Torchlight’s announcement of the Preferred Dividend Record 

Date would “create a short squeeze as there are many short stocks to cover before the merger!!” 

Within three minutes of the Stocktwits post, Palikaras emailed a screenshot of the post to Brda 

and other members of Meta I’s management, angrily demanding that investor relations personnel 

contact KingOneFolle and insist that the post and recording be deleted. Palikaras confided to 

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Meta I’s CFO his concern that the deal would “blow up” if his private communications about the 

short squeeze became public.  

E. Defendants Deceptively Marketed And Promoted The Preferred Dividend In 
Furtherance Of The Fraudulent Scheme.  

51. In addition to concealing their scheme from the market through misstatements and 

omissions, Defendants deceptively marketed and promoted the narrative that the Preferred 

Dividend would cause a short squeeze in furtherance of their plan to artificially inflate 

Torchlight’s stock price. As further described below, Defendants took steps to market and 

promote the Preferred Dividend in ways that were intended to: (i) cause short sellers, in the 

words of Brda, to “understand their dilemma” and trigger a short squeeze; and (ii) increase 

interest and confidence among legacy and prospective Torchlight shareholders, as well as 

convertible promissory note holders, in the anticipation of a potential short squeeze, increase in 

Torchlight’s stock price relating to the Preferred Dividend, and/or a purportedly valuable 

distribution from the Preferred Dividend.  

52. Initially, Defendants believed that they could simply “play up” the Preferred 

Dividend in press releases to trigger a short squeeze and/or inflate Torchlight’s stock price. In a 

written presentation to Palikaras and Meta I’s board in September 2020, Brda proposed his plan 

to emphasize the Preferred Dividend by using merger announcement press releases to “[p]lay up 

the [preferred share] dividend to make sure the shorts understand their dilemma.”  

53. Likewise, in the September 6, 2020 email from a Meta I board member—first 

discussed in paragraph 36 above—that board member wrote to his fellow board members, based 

on “two separate calls” that he and Palikaras had with Torchlight management (including Brda): 

“Torchlight’s well thought out strategy…is to finalize an LOI with [Meta I]…and strategically 

jointly announce it by way of a joint Press Release after the markets close.” The board member 

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wrote that the joint press release “will announce that at closing of the transaction all current 

shareholders of Torchlight will be issued an equivalent number of Pref Shares.” He also 

explained that, per Brda/Torchlight’s strategy, if the two companies agreed on “when the Joint 

Press Release goes out, the shorts will only have the weekend to come up with their own strategy 

to cover their short positions.” He added that “Torchlight’s management [which included Brda] 

is confident” that Torchlight’s stock price would go up following a press release playing up the 

Preferred Dividend.  

54. Consistent with this plan and proposal, Brda caused Torchlight to issue a press 

release on September 21, 2020, announcing its merger with Meta I—which Brda participated in 

drafting and was attached to Torchlight’s September 23, 2020 Form 8-K that Brda signed—that 

emphasized in the release’s title: “Special Dividend Intended to be Issued to Torchlight 

Shareholders at Closing.” Similarly, Torchlight’s December 14, 2020 press release—which Brda 

participated in drafting and was attached to Torchlight’s December 14, 2020 Form 8-K that Brda 

signed—announced Meta I and Torchlight’s definitive agreement to merge and highlighted in its 

title: “Preferred Stock Dividend to be Issued to Torchlight Shareholders Prior to Closing.” As 

demonstrated by the communications discussed in paragraphs 52-53 above, Brda deceptively 

highlighted this one aspect of the merger transaction—the Preferred Dividend to be issued at 

closing—with the intent of causing the shorts to exit their positions (i.e., “make sure the shorts 

understand their dilemma”) and cause Torchlight’s stock price to artificially increase.   

55. Following the September 21, 2020 press release announcing the merger and 

emphasizing the Preferred Dividend, the market did not appear to immediately react the way the 

Defendants intended. For example, Torchlight’s stock price continued to trade well below $1.00. 

As a result, Brda turned to some consultants that he knew and previously worked with to spread 

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the short squeeze narrative for Torchlight. Brda caused Torchlight to pay these consultants to 

communicate with current or potential Torchlight shareholders. Through these individuals—two 

of whom Brda introduced to Palikaras as his “guys on stock support”—Brda communicated 

information about the Preferred Dividend and short squeeze to shareholders.  

56. For example, on September 21, 2020, Brda forwarded to two consultants 

Torchlight’s press release announcing the merger and Preferred Dividend. As reflected in the 

below exchange, Brda instructed the consultants on how they should message the Preferred 

Dividend to investors:  

Brda: We need your guys to embrace it. IMO, you get the [Torchlight] value up to $1 and 
then the 25% of META is free. Lots of room to build a nice position. 
 
Consultant: Agreed, Everyone I’ve spoke [sic] to today love it and are buying more and 
are long term investors! TONS of volume but not moving up? 
 
Brda: I think people don’t understand the dividend properly. 
 
Consultant: I agree, I’m explaining it and I can hear the light come on while I’m talking 
to people. 
 
57. In January 2021, Brda emailed information about the outstanding short position in 

Torchlight to the stock-support consultants and wrote: “[w]e all knew [the shorts] would come 

after us one more time. They are creating a massive bubble, IMO, that is going to slingshot in 

our favor. The dividend is going to be a huge problem for them.” Through these and other 

communications, Brda prompted Torchlight’s consultants to explain the Preferred Dividend and 

its impact on short sellers to investors, without revealing that he and the company were driving 

that message or disclosing his intention to take advantage of the eventual temporary price 

inflation by selling Torchlight stock at inflated prices.  

58. To further conceal his deceptive use of stock-support consultants, Brda caused 

Torchlight to keep inadequate books and records and to maintain inadequate accounting controls 

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concerning these consultants. Other than generic contracts obligating the consultants to 

“introduce” the company to potential investors, Brda caused Torchlight to keep no records 

documenting why Torchlight paid the stock-support consultants $3,000 to $5,000 per month plus 

stock warrants for their services.  

59. Brda and Palikaras also deceptively had direct communications with select groups 

of investors where they further played up the short squeeze in furtherance of their scheme.  

60. For example, from March 16-18, 2021, Brda and Palikaras met with a series of 

institutional investors as part of an investment bank’s virtual Annual Investor Conference. 

During these meetings, Brda and Palikaras pitched the justification for the merger and described 

to at least one investment firm the potential for the Preferred Dividend to cause a short squeeze. 

A note-taker at the conference also recorded Brda telling an investment firm on March 17, 2021: 

“15 things driving our stock price, last thing before closing, is a short position, is hard to deliver 

dividend if short on closing.” Through these private communications, Defendants intended to 

drive interest with these investors in the merger and in buying or retaining Torchlight stock, 

without publicly disclosing their plan or belief that a short squeeze would occur.  

61. As another example, on May 13, 2021, Palikaras participated in a virtual meeting 

with a group of Italian shareholders (the “Italian Investor Call”) that he believed held a 

significant number of shares of Torchlight common stock. During that meeting, Palikaras 

described the plan to cause a short squeeze on several occasions, including in one instance:  

And there is one more element to add here, which is the, let’s call the x-factor. If 
you notice the Torchlight stock is massively shorted … This deal is set up not 
to give a [cash] dividend at closing. So, in order for the short positions to cover, 
they have to have the stock on their hand because the dividend will be paid out as 
a preferred share, not cash. As a result, there is no physical way for the shorts to 
cover the stock when the time to close, and we believe … there will be a potential 
jump towards the close, it’s called a short squeeze… (emphasis added). 
 

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62. In addition, Palikaras and Brda used social media to tout the Preferred Dividend in 

an indirect manner in furtherance of their market manipulation scheme.  

63. For instance, on June 7, 2021—one week before Torchlight announced the 

Preferred Dividend Record Date (as defined in paragraph 31 above)—Brda posted on Torchlight’s 

Twitter account a video discussing short squeezes in the context of other stocks. After viewing the 

tweet, Palikaras texted Brda, advising caution: “I don’t think you should be sharing posts on the 

short squeeze… yet. Just my two cents. Once it happens that’s ok as it is fact, but before you are 

putting yourself at risk for potentially speculative content.”  

64. On June 13, 2021—the day before Torchlight announced its Preferred Dividend 

Record Date—Palikaras tweeted a graphic of shorts-in-flames, kicking off a series of tweets 

designed to promote the short squeeze theory and encourage investors to purchase Torchlight’s 

common stock. A true and correct copy of this tweet is depicted below:  

 

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65. Palikaras testified during the SEC’s investigation that his tweet had nothing to do 

with the concept of a short squeeze, but the timing, circumstances, and content of his tweet imply 

that he intended to tout that the Preferred Dividend would set Torchlight’s “shorts” on fire by 

triggering a short squeeze. The reaction of his Twitter followers also belies his testimony. 

Palikaras’ tweet received several comments that made the connection clearly, including: 

• “You should set the price of the shorts the price of TRCH at the end of the 
short squeeze.” 

•  “This is class!!!! burn the shorts” 

• “We definitely get the reference “Shorts Are Getting Burner”” [sic] 

•  “Need a solid PR this Monday … flame those shorties…” 

• “This week will be epic! Torch the shorts!” 

66. Palikaras knew or had notice of these comments to his shorts-in-flame tweet. For 

example, he later posted in response to his tweet, acknowledging that his tweet had over 500 

likes in less than an hour. His communications also demonstrate that he was closely monitoring 

engagement on Twitter around the time of these responses to his tweet. Yet, Palikaras did 

nothing to disabuse the connection his followers on social media were drawing between his tweet 

and the short squeeze.   

F. Defendants Made False And Misleading Statements And Omissions Regarding The 
Value Of The Preferred Dividend In Furtherance Of The Fraudulent Scheme.  

67. As part of their scheme, Defendants also made false and misleading statements 

and omissions in public filings and public statements to investors about the Preferred Dividend. 

These misstatements and omissions created false impressions about the value of the Preferred 

Dividend and the likelihood that holders of the Preferred Dividend would receive a distribution 

of the “net proceeds” from the sale of Torchlight’s oil and gas assets. As further described below, 

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Defendants made these statements knowingly or with severe recklessness to induce investors to 

buy or hold Torchlight common stock in furtherance of their fraudulent scheme.  

i. Brda made false and misleading statements and omissions in Torchlight’s proxy 
filings and Form 8-K filings about ongoing “commercially reasonable efforts” to sell 
Torchlight’s oil and gas assets and plans to distribute “net proceeds” to holders of 
the Preferred Dividend. 
 

68. In Torchlight’s public filings leading up to the merger, Brda bolstered the 

potential value of the Preferred Dividend through false and misleading statements and omissions. 

Specifically, Brda misrepresented in Torchlight’s public filings that Torchlight would make 

“commercially reasonable efforts” to sell its oil and gas assets and distribute the net proceeds to 

holders of the Preferred Dividend within six months of the merger closing. Torchlight claimed 

that if the efforts to sell were unsuccessful six months after the merger date, it would then 

consider spinning off the assets. In reality, there were no prospects for selling Torchlight’s oil 

and gas assets within six months of the merger closing, and Brda had started planning to spin off 

the assets as soon the merger agreement was signed. His misrepresentations and omissions 

created the false impression about the likelihood that Preferred Dividend holders would receive a 

return on their investments in the form of a distribution of net proceeds from Torchlight’s sale of 

its oil and gas assets shortly after the merger. 

69. Brda, through Torchlight, first made this representation in Torchlight’s Form 8-K 

dated September 23, 2020, announcing the merger, stating that the merged company of 

Torchlight and Meta I would “use its commercially reasonable efforts to cause the Torchlight oil 

and gas assets to be sold [within six months of the initial merger date]. Torchlight legacy 

shareholders will be entitled to a special dividend distribution of any values attributable to the 

sale of Torchlight’s existing oil and gas business assets (net of [certain debt and holdbacks]…).”  

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70. Brda repeated a similar version of these false and misleading statements in several 

of Torchlight’s subsequent press releases and Forms 8-K, including most prominently in press 

releases attached to Torchlight’s Forms 8-K filed on April 15, 2021, May 4, 2021, and June 16, 

2021. Each of these public filings or press releases stated that Torchlight would distribute “net 

proceeds” to shareholders who received the Preferred Dividend. A distribution of net proceeds 

could only happen after Meta II (as successor-in-interest of Torchlight after the merger) made 

efforts (and succeeded) in selling the oil and gas assets within six months of the merger closing.  

71. As another example, in the press release announcing that Torchlight and Meta I 

signed a definitive merger agreement, Torchlight’s Form 8-K dated December 14, 2020, stated: 

“[f]ollowing the Reverse Split, and prior to the Effective Time, Torchlight will declare and issue 

a dividend, on a one-for‐one basis, of shares of preferred stock to the holders of its common 

stock. Following the Effective Time, the holders of preferred stock will be entitled to a dividend 

based on the net proceeds of the sale of any assets that are used or held for use in Torchlight’s oil 

and gas exploration business…, subject to certain holdbacks.”  

72. In Torchlight’s proxy statements—which Brda approved—Torchlight repeated 

the claim that it would make “commercially reasonable efforts” to sell the oil and gas assets. The 

proxy statements also contained statements about the distribution of proceeds from the sale of 

Torchlight’s oil and gas assets, as well as statements emphasizing that the Preferred Dividend 

would not be registered or traded on any exchange (consistent with Brda’s plan to cause a short 

squeeze and lead investors to believe a short squeeze would occur).  

73. By way of example, Torchlight’s definitive proxy statement dated May 7, 2021, 

contained the following false and misleading statements about “commercially reasonable efforts” 

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to sell the company’s oil and gas assets and a distribution that “may” be made to holders of the 

Preferred Dividend: 

The Arrangement Agreement provides that Torchlight and the Combined Company 
will use commercially reasonable efforts to sell the O&G Assets [within six months 
of the merger closing]. Torchlight stockholders of record as of the Series A 
Preferred Record Date, will receive a dividend, on a one-for-one basis, of shares of 
Series A Preferred Stock.… Holders of shares of Series A Preferred Stock may 
receive Asset Sale Dividends from any Asset Sale Transactions consummated 
[within six months of the merger closing], and may also receive a Spin-Off 
Dividend of any Remaining Assets that have not been sold in an Asset Sale 
Transaction [within six months of the merger closing].  
 
74. These statements were made repeatedly in Torchlight’s proxy materials. The 

company touted its “commercially reasonable efforts” to sell all of its oil and gas assets a half 

dozen times in its May 7, 2021 definitive proxy statement and with similar frequency in its 

preliminary proxy statements on February 4, 2021, March 23, 2021, and April 21, 2021. 

75. These statements and representations made by Brda in Torchlight’s public filings, 

proxy statements, and press releases were false and misleading at the time they were made. As 

Brda knew or was reckless in not knowing, Torchlight had no prospects to sell the oil and gas 

assets and had taken no actions to lay the groundwork for a sale when the statements were made. 

Brda also knew that Torchlight had unsuccessfully tried to sell its largest oil and gas asset for 

years. Due to the size and unproven state of Torchlight’s oil and gas assets, only a small number 

of companies were possible candidates to purchase Torchlight’s assets, and Torchlight’s records 

do not reflect any prospects or discussions with any such candidates in 2020 or 2021. Likewise, 

during the SEC’s investigation, neither Torchlight nor Brda could identify any specific prospects 

that the company had discussions with to sell its oil and gas leases in 2020 or 2021.  

76. Without any identified buyers or ongoing negotiations, Brda knew, or was 

severely reckless in not knowing, that a sale of Torchlight’s oil and gas assets within six months 

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of the merger closing was not possible. As Brda knew or was severely recklessly in not knowing, 

it would take at least a year, if not longer, simply to complete the due diligence that a specialized 

buyer would undertake before completing a sale of Torchlight’s assets.  

77. In addition, Brda knowingly or severely recklessly omitted material facts and 

information that were necessary in order to make his statements in Torchlight’s public filings 

referenced in paragraphs 68-74 not misleading. Among other things, Brda failed to disclose that, 

at the time of his above-referenced statements, Torchlight had no specific prospects or candidates 

to buy its largest oil and gas assets, that Torchlight had unsuccessfully tried to sell those asset for 

years, that Torchlight had no plans in place to use “commercially reasonable efforts” to complete 

the sale of its assets within six months of the merger closing, or that a sale of those assets within 

six months of the merger closing was not possible given the lack of prospects or candidates.  

78. Brda also knowingly or severely recklessly failed to disclose that he had laid the 

foundation for a spin-off of Torchlight’s oil and gas assets into a new entity as early as 

December 2020—mere days after the definitive agreement for the merger between Torchlight 

and Meta I was signed. In particular, beginning in December 2020, Brda circulated to 

Torchlight’s Chairman and other insiders presentations outlining capital formation plans for a 

spin-off entity (the “Spin-Off Entity”). He did not publicly disclose these plans.   

79. Additionally, Brda knowingly or severely recklessly failed to disclose that, 

starting in January 2021, he caused Torchlight to begin secretly paying $20,000 a month to 

individuals who would form the initial management team of the Spin-Off Entity. To conceal his 

plans, Brda caused Torchlight to make these monthly payments through an intermediary who 

received “consulting fees” for doing no actual work. He further caused Torchlight to keep 

inadequate books and records, and/or caused it to maintain insufficient controls, to document 

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why Torchlight was making these monthly payments to this intermediary. Brda did not publicly 

disclose these payments or his fully-formed spin-off plans before the merger closing.    

80. By August 2021—just six weeks after the merger closed—Brda sent the post-

merger Meta II Board a fully-formed plan to abandon all of its so-called “efforts” to sell the 

assets and, instead, to spin off the assets into the Spin-Off Entity—which had the same name as 

the Spin-Off Entity that Brda identified in his presentation to Torchlight’s board back in 

December 2020—with a specific management team that Brda and Torchlight had been paying 

clandestinely through an intermediary since January 2021. Consistent with Brda’s 

recommendation, by August 17, 2021—less than 60 days after the merger closed—Meta II’s 

Board voted to “discontinue” any so-called “effort” to sell the assets and, instead, to drill wells 

required to maintain the leases, with a goal of spinning off the assets into a separate company as 

soon as possible. 

81. Thus, Brda knew, or was severely reckless in not knowing, that no “commercially 

reasonable efforts” would be undertaken to sell Torchlight’s assets, that the assets could not be 

sold within six months of the merger closing, and that no distribution from such a sale would 

occur. And he knowingly or severely recklessly made false and misleading statements and 

omissions to the contrary in furtherance of his scheme to manipulate Torchlight’s stock price.  

ii. Palikaras made false statements about the value of the Preferred Dividend.  
 

82. On May 13, 2021, Palikaras participated in the Italian Investor Call, as described 

and alleged in paragraph 61 above. Palikaras believed that the investors on the Italian Investor 

Call held a significant number of shares of Torchlight common stock. The stated purposes of the 

Italian Investor Call were to: (a) solicit the Italian shareholders’ proxy votes in favor of the 

merger between Torchlight and Meta I, and (b) encourage the investors to hold the common 

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stock of the post-merger company. During the Italian Investor Call, as discussed in paragraphs 

83-88 below, Palikaras made false and misleading statements regarding at least two topics.  

83. First, Palikaras claimed that Torchlight was speaking to “the right potential 

buyers” and that the buyers were “top tier.” However, as Palikaras knew or was severely reckless 

in not knowing, Torchlight had not identified any potential buyers. In fact, Palikaras admitted in 

sworn testimony during the SEC’s investigation that, at the time he made the statement, he had 

no knowledge of potential buyers or active negotiations.  

84. Second, Palikaras claimed that, based on “the analysis,” the value of the Preferred 

Dividend could be between $1–$20 per share.  

85. As Palikaras knew or was severely reckless in not knowing, the $1–$20 per share 

range that he identified was wholly unsupported. Likewise, there was no “analysis” supporting 

his statement. Indeed, by the time he made this statement, he had reviewed the investment bank’s 

third-party asset valuation, which implied an estimated asset value of less than $1.00 per share. 

Palikaras’ reference to an “analysis” also gave investors the misleading impression that his value 

range was supportable, when it was not. 

86. By at least June 11, 2021, a partial audio recording of the Italian Investor Call had 

been posted to social media, which included Palikaras’ false and misleading statements 

referenced above. Palikaras’ statements quickly became a topic of discussion on social media in 

the days leading up to the merger closing. A common refrain on social media was that the 

company’s post-merger CEO (Palikaras) estimated that the Preferred Dividend would be worth 

$20 per share. Palikaras and Brda were aware of the discussions on social media and the 

existence of the recording, but neither one made any effort to correct or clarify Palikaras’ 

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misstatements that, at that time, they knew, or were severely reckless in not knowing, were 

materially false or misleading and that investors were relying on.  

87. After the merger, Meta II’s VP of Business Development emailed Palikaras and 

other members of the Meta II management team about an investor complaint citing the $1–$20 

dividend range. Meta II’s VP of Business Development stated plainly, “[t]he dividend was never 

going to be worth more than $1… The math was not difficult prior to the merger: value of O&G 

assets / number of pre-existing TRCH shares.” In other words, as Meta II’s VP of Business 

Development confirmed, Palikaras’ $1–$20 estimate never had any basis in fact. 

88. Defendants’ false and misleading statements gave investors the false impression 

that Torchlight had made some progress toward selling its oil and gas assets, and that Meta II 

would be able to quickly monetize Torchlight’s oil and gas assets and distribute the net proceeds 

to shareholders post-merger. This false impression incentivized investors to acquire or hold 

Torchlight common stock through the Record Date to be eligible to receive the Preferred 

Dividend. Torchlight legacy shareholders who believed Defendants’ misrepresentations about 

the value of the Preferred Dividend were incentivized not to sell before the Record Date, and 

thus, missed the opportunity to sell when Torchlight’s stock price increased leading up to the 

merger. In turn, this false impression furthered Defendants’ scheme to manipulate the market by 

artificially inflating the value of Torchlight’s stock.  

G. Defendants Succeeded In Manipulating The Price Of Torchlight Stock.  

89. As a result of their fraudulent scheme and through the use of false and misleading 

statements and omissions, Defendants artificially inflated the price of Torchlight stock in the 

days and weeks leading up to the merger closing in June 2021.  

90. On June 14, 2021—just a day after Palikaras made his “shorts-in-flames” tweet 

mentioned in paragraph 64 above—Torchlight issued a press release announcing the Preferred 

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Dividend Record Date of June 24, 2021. That same day, Palikaras issued a tweet, linking the 

press release and stating: “[n]ice release by $TRCH, the dividend [record] date is 06/24 (ten day 

notice required), there is a T plus 2 rule so last chance to be in @TRCHEnergy is Tuesday 06/22 

end of day.”4 Posts and content from other users on social media on or around June 14–22, 2021 

show that investors following news about Torchlight and/or Meta I understood Palikaras’ tweet 

to mean that the key to obtaining the benefits of the short squeeze and the Preferred Dividend—

which Palikaras had led investors to believe was worth $1–$20 per share—was to buy or hold 

Torchlight stock through June 22, 2021 (the T+2 Date). 

91. As Defendants intended, users on Twitter, Stocktwits, YouTube, Reddit, and 

other social media platforms discussed the merger, the Preferred Dividend, and the short squeeze 

in the days leading up to the merger and Record Date.  

92. On June 14, 2021, Brda sent Palikaras an image of an online campaign promoting 

the short squeeze theory using the hashtag “#TORCHDAY.” An anonymous user created a 

graphic that conveyed the precise message that Defendants privately hoped to spread: “Post and 

educate people about our short squeeze … #TORCHDAY” and “Post and educate people about 

our dividend ranging from $1 - $20 (deadline 06/22).” The graphic went on to explain 

“[Torchlight] is a heavily shorted stock, and due to the fact a preferred share dividend is being 

granted to stockholders SHORTS HAVE TO COVER which can lead to a short squeeze of the 

stock.” The Torch Day graphic also explicitly referenced Palikaras’ “shorts-in-flames” tweet 

from the day before. 

 
4 The “T plus 2 rule” mentioned in Palikaras’ tweet is the rule, in place at the time, under which 
the settlement cycle—the time between the transaction date and the settlement date—for most 
securities transactions was two business days. Thus, per this rule, investors generally had to 
either hold or place an order to buy Torchlight stock by June 22, 2021 (“T+2 Date”) to ensure 
they were Torchlight shareholders of record as of the June 24, 2021 Record Date.   

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93. Social media users posted the hashtag and versions of the graphic dozens of times 

over a few days around June 14-16, 2021. And users on many other social-media platforms 

picked up on the basic gist of the scheme to promote purchasing Torchlight common stock to 

benefit from the supposed short squeeze by June 22 (the T+2 Date), using other hashtags, 

subreddits, and iterations discussing the Preferred Dividend, the Record Date, the expected $1–

$20 dividend, and the short squeeze. 

94. The trading volume of Torchlight stock dramatically surged as the merger 

approached. In May 2021, the average trading volume was 5 million shares per day. But, 

between the announcement of the Record Date on June 14, 2021 and the T+2 Date (June 22, 

2021), the average trading volume exceeded 80 million shares per day. 

95. Likewise, following the announcement of the Record Date on June 14, 2021, the 

price of Torchlight stock surged. The price at closing jumped from $3.58 per share on June 14 to 

$5.07 per share on June 15 to $5.99 per share on June 16. Torchlight stock price peaked at 

$10.88 per share on June 21—an increase of over 200% from its price at closing on June 14.  

96. Torchlight’s stock price artificially increased as a result of Defendants’ scheme. 

However, the evidence available at this time is inconclusive as to whether, or to what extent, the 

trading volume was attributable to short sellers covering their positions versus defrauded 

investors purchasing Torchlight’s stock to “burn the shorts” or obtain the Preferred Dividend that 

they believed was worth $1–$20.  

97. Regardless, at the time that Torchlight’s stock price was surging in June 2021, 

Brda and Palikaras believed that a short squeeze was driving the surge. For example, as further 

discussed in paragraph 104 below, on June 18, 2021—after Torchlight’s stock price began to 

increase—Brda told Palikaras that they needed “to take advantage of the squeeze,” which they 

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did through an ATM Offering that they had discussed and planned as early as September 2020. 

Through their deceptive marketing and promotion discussed in paragraphs 51-66 above, 

Defendants also led retail and other investors to believe that a short squeeze would occur and 

drive the surge in Torchlight’s stock price. Also, the aim of Defendants’ scheme was to 

manipulate the market by artificially increasing Torchlight’s stock price. Defendants achieved 

that aim when Torchlight’s stock price suddenly and temporarily surged in June 2021 as a result 

of Defendants’ plans and intent to manipulate the price of Torchlight stock. And as discussed 

below, Defendants achieved the other aim of their scheme through an ATM Offering conducted 

at the height of their price manipulation.   

H. Brda Deployed An ATM Offering To Capitalize On The Fraudulent Scheme.  

98. Upon successfully manipulating the market for Torchlight common stock, Brda 

set in motion the next phase of the scheme: the ATM Offering. His plan— which was not 

disclosed in any public filings or statements—sought to capitalize on what he knew or expected 

to be a temporary artificial increase in Torchlight’s stock price.  

99. Before executing the ATM Offering, Brda sought a formal agreement from Meta I 

to use some of the funds raised by the ATM Offering toward drilling oil wells to maintain 

Torchlight’s oil and gas leases. In an email to Palikaras dated June 16, 2021, Brda wrote:  

“We have the ATM that will be in play by Thursday morning… up to $100 Million…  
Raising money prior to the dividend record date, IMO, is the best way to get maximum 
money and at the best price… I believe I can get my board to approve if META would 
agree to lend a decent portion of the raise to [Torchlight]… Say 20% of the amount raised… 
Otherwise, we have no inclination to raise capital now as it only dilutes our oil and gas 
assets further…. The ducks are quacking, time to feed them!” (emphasis added). 

100. Although Palikaras knew from the outset of negotiations about Brda’s plan to use 

an ATM Offering to capitalize on their scheme to manipulate the price of Torchlight stock—as 

discussed, among other places, in paragraph 36 above— Brda waited to make this request to use 

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funds from the ATM Offering to pay Torchlight’s drilling expenses until June 16, 2021—less 

than ten days before the Torchlight-Meta I merger was set to close. At that point in time, Brda 

had leverage over Palikaras and Meta I, who stood to reap the benefit of the ATM Offering for 

Meta II’s post-merger operations. 

101. Palikaras and Meta I’s CFO recommended to Meta I’s Board that they take the 

deal proposed by Brda, writing on or around June 18, 2021: “all [Meta I’s advisers] strongly 

recommended we take as much of the money as we can ahead of the closing.” And while the 

ATM Offering would be “[d]ilutive to Torchlight [common and preferred] shareholders, before 

Ex-Dividend date however it also takes advantage of the potential best pricing due to any short 

covering effect prior to the Ex-Date.” (emphasis added).   

102. Despite Palikaras’ recommendation, Meta I did not formally agree to Brda’s 

demands. Nonetheless, Torchlight ultimately did vote to proceed with the ATM Offering, and 

later Meta II entered into an agreement post-merger to fund the drilling for the oil and gas 

assets—consistent with Brda’s original plan and scheme.    

103. More importantly, Brda and Torchlight went forward with the ATM Offering as 

Defendants had planned while Torchlight’s stock price was at its height. Specifically, Brda 

caused Torchlight, through an investment bank, to commence the ATM Offering starting on June 

18, 2021—just days after the June 14 announcement of the Record Date.  

104. Brda intended the ATM Offering to capitalize on Defendants’ price manipulation. 

On June 18, 2021—after the ATM Offering had commenced—Brda wrote Palikaras: “[w]e need 

to be selling more than we are, the shorts always push down at the end of the day… We have two 

days to take advantage of the squeeze, today should have been a 5 million share day at 6[.]” 

(emphasis added).  

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105. Palikaras knew about and agreed with Brda’s plan to use the ATM Offering to 

capitalize on their market manipulation efforts. On June 16, 2021—as Torchlight’s stock price 

continued to rise following the June 14 announcement of the Record Date—Palikaras wrote Brda 

to express his agreement with taking advantage of the inflated value of Torchlight’s stock: “[t]o 

the moon! We are happy to take $100-200m at a 20% PREMIUM TO THE MARKET and a 

minimum of $7 whatever is largest.” Then, on June 18, 2021, in response to Brda’s above-cited 

message that “[w]e have two days to take advantage of the squeeze” through the ATM Offering, 

Palikaras wrote Brda: “Go ahead to $5.75. 5m shares. Fill her up[.]” 

106. Ultimately, Torchlight, through an investment bank, conducted the ATM Offering 

over a five-day period between Friday, June 18, 2021, and Thursday, June 24, 2021. In the 

middle of that offering period, on June 21, 2021, Torchlight’s stock price reached a record high 

of $10.88 per share and closed at $9.92 per share. Overall, Torchlight sold 16.2 million shares 

during the ATM Offering at an average price of $8.50 per share. Over 95% of that volume was 

sold prior to the T+2 Date. In total, Torchlight raised $137.5 million through the ATM Offering. 

107. Torchlight’s stock price fell dramatically after the T+2 Date and Torchlight’s 

completion of the ATM Offering. On June 22, 2021, the T+2 Date, the stock closed at $7.00 per 

share. By June 25th—after Torchlight had completed its ATM Offering—the stock had dropped 

to $4.95 per share at closing. The following Monday (June 28, 2021), after Torchlight announced 

a 2-for-1 reverse stock split and the completion of its merger with Meta I, the company’s new 

ticker (MMAT) closed at $3.98 per share (after accounting for the reverse split, less than half its 

prior-day closing price). Investors who purchased or held Torchlight common stock during the 

course of Defendants’ fraudulent scheme suffered pecuniary harm.  

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I. Brda Profited From The Fraudulent Scheme.  

108. Brda profited off his fraudulent scheme and false and misleading statements to 

investors.  

109. On June 24, 2021, immediately after the ATM Offering and one day before the 

merger closed, Brda urged Torchlight’s Compensation Committee to award him a $1.5 million 

bonus. He presented the Committee with a “Top Ten + 2 Reasons to Pay Bonus to John Brda,” 

which touted his achievements in conceiving and executing the Torchlight-Meta I merger. He 

specifically pointed out that he “[m]anaged the entire merger process with [Meta I] leading to a 

market cap increase from $30 million to nearly $1.44 billion.” He also wrote that he 

“[c]onceived the timing of the shareholder meeting with windows to raise additional equity and 

filing of the shelf S3 for $240 million along with the ATM–raising full amount of $133 million 

on ATM.” He explained that he “[h]andled all investor calls and fund calls during the process.” 

For these reasons, Brda requested a “bonus of $1.5 million in cash.”  

110. Meta II paid Brda the $1.5 million bonus in two $750,000 increments—half 

before closing on June 25, 2021, and the other half after the merger closed.  

111. Brda received his $1.5 million bonus as a result of the funds he raised through his 

market manipulation scheme and his false and misleading statements and omissions. Had he not 

engaged in this fraudulent scheme, he would not have received the bonus. Indeed, to his request 

to the Compensation Committee, Brda attached a spreadsheet reflecting Torchlight’s remaining 

obligations, which makes clear that the company would not have sufficient funds to pay a $1.5 

million bonus or its existing obligations, but for the proceeds of the ATM Offering. 

 

 

 

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VI. CLAIMS FOR RELIEF 

FIRST CLAIM FOR RELIEF 
Violations of Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)] 

(Against All Defendants) 

112. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if 

fully set forth hereunder.  

113. Between at least June 2020 and June 25, 2021, Defendants planned and 

perpetrated a scheme to manipulate the market by artificially increasing the price of Torchlight’s 

stock on a temporary basis and capitalizing on that artificial increase through the ATM Offering. 

As further described and alleged in paragraphs 20-107 above, Defendants knowingly and/or 

severely recklessly engaged in deceptive and/or manipulative acts in furtherance of the 

fraudulent scheme.  

114. Defendants also knowingly and/or severely recklessly made false and misleading 

statements or omissions of material fact, as further described and alleged in paragraphs 38-50 

and 67-88 above.  

115. By engaging in the acts and conduct alleged herein, Defendants, directly or 

indirectly, in the offer or sale of securities, by the use of the means or instruments of 

transportation or communication in interstate commerce or by use of the mails, have: 

• employed a device, scheme, or artifice to defraud; and/or  

• obtained money or property by means of an untrue statement of a material fact 

or an omission to state a material fact necessary in order to make the 

statements made, in light of the circumstances under which they were made, 

not misleading; and/or  

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• engaged in a transaction, practice, or course of business which operated or 

would operate as a fraud or deceit upon the purchaser.  

116. With regard to the violations of Section 17(a)(1), Defendants acted with scienter 

and engaged in the referenced acts knowingly and/or with severe recklessness.  With regard to 

the violations of Sections 17(a)(2) and 17(a)(3), Defendants acted at least negligently. 

117. By reason of the foregoing, Defendants have violated, and unless enjoined will 

continue to violate, Section 17(a) of the Securities Act [15 U.S.C. § 77q(a)]. 

SECOND CLAIM FOR RELIEF 
Violations of Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)]  

and Rule 10b-5 thereunder [17 C.F.R. § 240.10b-5] 
(Against All Defendants) 

118. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if 

fully set forth hereunder. 

119. Between at least June 2020 and June 25, 2021, Defendants planned and 

perpetrated a scheme to manipulate the market by artificially increasing the price of Torchlight’s 

stock on a temporary basis and capitalizing on that artificial increase through the ATM Offering. 

As further described and alleged in paragraphs 20-107 above, Defendants knowingly and/or 

severely recklessly engaged in deceptive and/or manipulative acts in furtherance of the 

fraudulent scheme.  

120. Defendants also knowingly and/or severely recklessly made false and misleading 

statements or omissions of material fact, as further described and alleged in paragraphs 38-50 

and 67-88 above.  

121. By engaging in the acts and conduct alleged herein, Defendants, directly or 

indirectly, singly or in concert with others, in connection with the purchase or sale of securities, 

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by the use of any means or instrumentality of interstate commerce, or of the mails or of any 

facility of any national securities exchange: 

• employed a device, scheme, or artifice to defraud; and/or  

• made untrue statements of material facts, or omitted to state material facts 

necessary in order to make the statements made, in light of the circumstances 

under which they were made, not misleading; and/or  

• engaged in acts, practices, or courses of business which operated, or would 

operate, as a fraud or deceit upon any person. 

122. With regard to the violations of Section 10(b) and Rule 10b-5, Defendants acted 

with scienter and engaged in the referenced acts knowingly and/or with severe recklessness. 

123. By reason of the foregoing, Defendants have violated, and unless enjoined will 

continue to violate, Section 10(b) of the Exchange Act [15 U.S.C. § 78j(b)] and Rule 10b-5 

thereunder [17 C.F.R. § 240.10b-5].  

THIRD CLAIM FOR RELIEF 
Violations of Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)]  

and Rule 14a-9 thereunder [17 C.F.R. § 240.14a-9] 
(Against All Defendants) 

124. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if 

fully set forth hereunder. 

125. As further described and alleged in paragraphs 39-46 and 67-81 above, 

Torchlight’s proxy statements contained false or misleading statements and/or omissions of 

material fact. Brda solicited and/or permitted the use of his name to solicit shareholder approval 

via the proxy statements containing false or misleading statements or omissions of material fact.  

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41 
 

126. As further described and alleged in paragraphs 82-88 above, Palikaras  solicited 

shareholder approval by means of the oral and/or written communications during the Italian 

Investor Call that contained statements that, at the time and in the light of the circumstances 

under which those statements were made, were false or misleading with respect to a material 

fact, and/or that omitted to state a material fact necessary in order to make the statements therein 

not false or misleading or necessary to correct any statement in any earlier communication with 

respect to the solicitation of a proxy for the same meeting or subject matter which became false 

or misleading.  

127. By engaging in the acts and conduct alleged herein, each Defendant, directly or 

indirectly, singly or in concert with others, by the use of the mails or by any means or 

instrumentality of interstate commerce or of any facility of any national securities exchange or 

otherwise, solicited and/or permitted the use of his name to solicit a proxy or consent or 

authorization with respect of securities; and such solicitation was made by means of a proxy 

statement or other communication, written or oral, that contained false or misleading statements 

with respect to a material fact and/or omitted to state a material fact necessary in order to make 

the statements therein not false or misleading or necessary to correct any statement in any earlier 

communication with respect to the solicitation of a proxy for the same meeting or subject matter 

which has become false or misleading, in violation of Section 14(a) of the Exchange Act and 

Rule 14a-9 thereunder.  

128. With regard to the violations of Section 14(a) and Rule 14a-9, Defendants acted at 

least negligently.  

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42 
 

129.  By reason of the foregoing, Defendants have violated, and unless enjoined will 

continue to violate, Section 14(a) of the Exchange Act [15 U.S.C. § 78n(a)] and Rule 14a-9 

thereunder [17 C.F.R. § 240.14a-9].  

FOURTH CLAIM FOR RELIEF 
Aiding and Abetting Meta II’s Violations of Section 13(a) of the Exchange Act [15 U.S.C. 

§§ 78m(a)] and Rules 12b-20 and 13a-11 thereunder [17 C.F.R. §§ 240.12b-20, 240.13a-11] 
(Against Brda) 

130. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if 

fully set forth hereunder. 

131. At the time of the conduct alleged herein, including the statements, omissions, 

and periodic securities filings described above, Torchlight was an issuer of securities registered 

under Section 12 of the Exchange Act that filed required reports with the SEC under Section 

13(a) of the Exchange Act and related rules and regulations. Torchlight subsequently merged 

with Meta I to become Meta II. 

132. As further described and alleged in paragraphs 67-71 and 75-81 above, Torchlight 

made untrue statements of material fact without adding such further material information as may 

be necessary to make the statements not misleading in its periodic securities filings, including 

but not limited to the false and/or misleading statements and/or omissions in its press releases 

attached to its Forms 8-K filed with the SEC on December 14, 2020, April 15, 2021, May 4, 

2021, and June 16, 2021.  

133. As further described and alleged in paragraphs 15, 67-71, and 75-81 above, Brda 

knew or was severely reckless in not knowing that Torchlight’s periodic securities filings, 

including but not limited to its press releases attached to its Forms 8-K filed with the SEC on 

December 14, 2020, April 15, 2021, May 4, 2021, and June 16, 2021, contained untrue 

statements of material fact without adding such further material information as may be necessary 

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43 
 

to make statements not misleading in its periodic securities filings. Brda also, among other 

things, signed, approved, drafted or helped draft, and caused Torchlight to file such press 

releases and/or periodic securities filings.  

134. By engaging in the acts and conduct alleged herein, Meta II—as the successor-in-

interest of Torchlight—violated Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 

thereunder. Meta II has consented to the entry of the SEC’s Order Instituting Cease-and-Desist 

Proceedings Pursuant to Section 8A of the Securities Act of 1933 and Section 21C of the 

Securities Exchange Act of 1934, Making Findings, and Imposing a Cease-and-Desist Order 

(“OIP”), finding that Meta II violated Section 13(a) of the Exchange Act and Rules 12b-20 and 

13a-11 thereunder.   

135. By engaging in the acts and conduct alleged herein, Brda aided and abetted Meta 

II’s violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder by 

knowingly or recklessly providing substantial assistance to Meta II in violating Section 13(a) of 

the Exchange Act and Rules 12b-20 and 13a-11 thereunder.  

136. By reason of the foregoing, Brda, directly or indirectly, aided and abetted, and 

unless enjoined will continue to aid and abet—and/or should be restrained from further aiding 

and abetting—violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11.  

FIFTH CLAIM FOR RELIEF 
Aiding and Abetting Meta II’s Violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the 

Exchange Act [15 U.S.C. §§ 78m(b)(2)(A) and 78m(b)(2)(B)]  
(Against Brda) 

137. The SEC re-alleges and incorporates paragraphs 1-111 above by reference as if 

fully set forth hereunder. 

138. As further described and alleged in paragraphs 55-58 and 78-80, Meta II (then 

Torchlight) failed to implement internal accounting controls and maintain adequate books and 

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44 
 

records by failing to account properly for the disposition of corporate assets or recognition of 

legitimate expenses through a series of payments made to stock-support consultants who 

rendered services to the company without sufficient documentation.  

139. As further described and alleged in paragraphs55-58 and 78-80, Meta II (then 

Torchlight) also failed to implement internal accounting controls and maintain adequate books 

and records by failing to account properly for the disposition of corporate assets or recognition of 

legitimate expenses through a series of payments made to an intermediary who received 

“consulting fees” without documentation reflecting the services this intermediary purportedly 

provided (such fees were ultimately paid by the intermediary to individuals who would form the 

initial management team of the Spin-Off Entity, but Torchlight did not maintain records 

reflecting the same). During the SEC’s investigation, Meta II failed to provide documents or 

information to SEC staff describing Torchlight’s internal accounting controls related to payments 

to consultants. If Torchlight had such internal accounting controls, they were either insufficiently 

devised or maintained to account properly for Torchlight’s disposition of assets or recognition of 

expenses.  

140. Torchlight’s stock support consultants, and the consultant used to funnel $20,000 

per month to the Spin-Off Entity management, provided no evidence to Torchlight of services 

rendered other than generic consulting contracts. This expense represented a substantial portion 

of Torchlight’s overall expenses in the first half of 2021.  

141. By engaging in the acts and conduct alleged herein, Meta II—as the successor-in-

interest of Torchlight—violated Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.   

Meta II has consented to the entry of the SEC’s OIP, finding that Meta II violated Section 

13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.   

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142. By engaging in the acts and conduct alleged herein, Brda aided and abetted Meta 

II’s violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act by knowingly or 

recklessly providing substantial assistance to Meta II in violating Sections 13(b)(2)(A) and 

13(b)(2)(B) of the Exchange Act.  

143. By reason of the foregoing, Brda, directly or indirectly, aided and abetted, and 

unless enjoined will continue to aid and abet—and/or should be restrained from further aiding 

and abetting—violations of Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act.  

VII. PRAYER FOR RELIEF 

144. WHEREFORE, the SEC respectfully requests that this Court enter a Final 

Judgment:  

• Permanently restraining and enjoining Defendant Brda from violating, 

directly or indirectly, Section 17(a) of the Securities Act and Sections 10(b) and 14(a) of the 

Exchange Act and Rules 10b-5 and 14a-9 thereunder, and from aiding and abetting future 

violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 

and 13a-11 thereunder; 

• Permanently restraining and enjoining Defendant Palikaras from violating, 

directly or indirectly, Section 17(a) of the Securities Act and Sections 10(b) and 14(a) of the 

Exchange Act and Rules 10b-5 and 14a-9 thereunder; 

• Permanently barring each Defendant, pursuant to Section 20(e) of the 

Securities Act and Section 21(d)(2) of the Exchange Act, from acting or serving as an officer or 

director of any issuer that has a class of securities registered pursuant to Section 12 of the 

Exchange Act or that is required to file reports pursuant to Section 15(d) of the Exchange Act; 

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• Permanently restraining and enjoining each Defendant from directly or 

indirectly, including but not limited to, through any entity owned or controlled by him, 

participating in the issuance, purchase, offer, or sale of any security, provided, however, that 

such injunction shall not prevent him from purchasing or selling securities for his own personal 

account;  

• Ordering Defendant Brda to disgorge all ill-gotten gains received as a 

result of the violations alleged herein, together with pre-judgment interest thereon, pursuant to 

the Court’s equitable powers and Sections 21(d)(3), 21(d)(5), and 21(d)(7) of the Exchange Act 

[15 U.S.C. §§ 78u(d)(3), (5), and (7)]; 

•  Ordering each Defendant to pay civil penalties pursuant to Section 20(d) 

of the Securities Act [15 U.S.C. § 77t(d)] and Section 21(d)(3) of the Exchange Act [15 U.S.C. 

§ 78u(d)(3)]; and  

• Granting such other and further relief as this Court may deem appropriate, 

just, equitable, and/or necessary.  

VIII. JURY DEMAND 
  

145. The SEC demands trial by jury in this action on all issues so triable. 

Dated:  June 25, 2024   Respectfully submitted, 
 

/s/ Patrick Disbennett 
     Patrick Disbennett (pro hac vice application pending) 

Christopher Rogers (pro hac vice application pending) 
 
U.S. Securities and Exchange Commission 
801 Cherry Street, Suite 1900 
Fort Worth, Texas 76102 
Tel: 817-978-3821 
[email protected]  
[email protected] 

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	I. SUMMARY
	II. JURISDICTION AND VENUE
	III. DEFENDANTS
	V. FACTS
	A. With Torchlight Facing Serious Financial Distress, Brda Hatched A Scheme to Manipulate The Price of Torchlight Stock And Capitalize On That Manipulation.
	B. Brda Found A Merger Partner—Meta I And Its CEO, Palikaras—Willing To Help Him Carry Out The Fraudulent Scheme.
	C. Defendants Designed And Planned The Preferred Dividend In Furtherance Of The Fraudulent Scheme.
	D. Defendants Made Materially False And Misleading Statements And Omissions Regarding Their Plans And Intent To Manipulate The Price Of Torchlight Stock.
	E. Defendants Deceptively Marketed And Promoted The Preferred Dividend In Furtherance Of The Fraudulent Scheme.
	F. Defendants Made False And Misleading Statements And Omissions Regarding The Value Of The Preferred Dividend In Furtherance Of The Fraudulent Scheme.
	i. Brda made false and misleading statements and omissions in Torchlight’s proxy filings and Form 8-K filings about ongoing “commercially reasonable efforts” to sell Torchlight’s oil and gas assets and plans to distribute “net proceeds” to holders of ...
	ii. Palikaras made false statements about the value of the Preferred Dividend.

	G. Defendants Succeeded In Manipulating The Price Of Torchlight Stock.
	H. Brda Deployed An ATM Offering To Capitalize On The Fraudulent Scheme.
	I. Brda Profited From The Fraudulent Scheme.