Mullen Automotive (NASDAQ: MULN) has changed up its claims on what has led to its rapid share price depreciation. The company has now dropped a lawsuit that it filed back in August 2023 against certain broker-dealers, wherein they alleged that these brokers were involved in a scheme to manipulate the share price of the company’s securities via short selling.
The August lawsuit, which targeted TD Ameritrade, Charles Schwab, and National Finance Services, was dropped following the filing of a spoofing complaint against UBS Securities, IMC Financial Markets, and Clear Street Markets. The latest lawsuit, filed on December 6 in the District Court for the Southern District of New York, alleges a market manipulation scheme was entered into by the defendants and/or their customers to use spoofing to manipulate the share price of Mullen.
Spoofing essentially amounts to the placing of non-bona fide buy and sell orders that are not intended to be executed upon. Mullen describes the method as a means to “trick” shareholders into placing their own orders at a time, price, or quantity that they otherwise would not have.
“In the 21 years our team has been prosecuting market manipulation cases against Wall Street, I believe this could be one of the largest and strongest spoofing and market manipulation cases we have handled. After working with our consulting and investigative experts, I believe the damage model could be in the billions of dollars,” commented Wes Christian of Christian Attar Group, a leading short selling litigator.
Mullen in voluntarily dismissing its short selling complaint commented that it believes the spoofing litigation “has exponentially greater potential to recover damages,” which is based on a two year time period for when the spoofing is claimed to have taken place. The short selling complaint comparatively covered a time period of just three months.
Mullen Automotive last traded at $0.16 on the Nasdaq, following two reverse splits having been conducted this year, while a third awaits shareholder approval.
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