U.S. authorities allege that a California-based firm misled investors when it touted the stock of a struggling solar energy company on social media, while it was quietly acquiring that stock on the cheap and selling it to unsuspecting investors.
The U.S. Securities and Exchange Commission (SEC) charged the firm, RB Capital Partners Inc., and its owners (a husband and wife, Brett Rosen and Deborah Braun) with securities fraud in connection with an alleged scheme to misleadingly promote the stock of a microcap issuer, Solar Integrated Roofing Corp.
In its complaint, the SEC alleged that between January 2021 and June 2024, the firm and Rosen aggressively touted the company’s stock on social media, claiming that it was an attractive, long-term investment, while simultaneously making large, undisclosed sales of their own stock.
The SEC alleged that as part of the scheme, the firm “created the false impression” that it was acquiring the stock at far higher prices than it actually paid.
Specifically, the regulator said it purchased convertible notes that purportedly allowed it to acquire stock at between US$3 and US$4.50 per share, when, in fact, it was converting the notes into over 1.6 billion shares at much lower prices, between 0.005¢ per share and 14¢ per share — and then selling more than 1.4 billion shares into the market.
“… directly contrary to their social media posts promoting Solar stock, the RB Capital defendants converted their Solar stock at the lower prices … and sold them into the open market for enormous profits, without disclosing their massive Solar stock sales to the unsuspecting public,” the SEC alleged in its complaint.
The regulator also charged Solar’s ex-CEO, David Massey, for his role in the alleged scheme. He was charged with securities fraud for allegedly making false and misleading statements in a company press release, which claimed that it had secured a US$10 million line of credit. The company’s stock price and trading volume soared, rising 40% and 500%, respectively, following that release.
In a parallel criminal action, Rosen, Braun and RB Capital were also charged by the U.S. attorney’s office for the Southern District of California.
In a 24-count indictment, authorities alleged that they engaged in a long-running market manipulation scheme that involved six issuers, including Solar Integrated.
Alongside the SEC’s case, U.S. authorities alleged that the pair touted the companies’ stock publicly, using false and misleading information, while secretly selling their own holdings. They were charged with various counts of securities fraud, money laundering and conspiracy.
None of the allegations have been proven.