Mullen Automotive Overcomes Motion to Dismiss in Market Manipulation Lawsuit

Mullen Automotive Inc. (MULN), an electric vehicle manufacturer, has successfully defeated a motion to dismiss filed by defendants IMC Financial Markets, Clear Street Markets LLC, UBS Securities, LLC, and Does 1-10 in an ongoing legal case.

The lawsuit, pending in the United States District Court for the Southern District of New York, alleges that between November 5, 2021 and November 15, 2023, the defendants engaged in high-frequency algorithmic trading to manipulate and spoof Mullen shares. The claims cite violations of Section 10(b), Rule 10b-5(a) and (c), and Section 9(a) of the Securities Exchange Act of 1934, along with allegations of fraud under New York common law.

According to FINRA, spoofing is “an insidious form of market manipulation that undermines the transparency and integrity of the markets by distorting the true nature of supply and demand.” This practice involves placing and then canceling fake buy or sell orders to mislead market participants.

Mullen (MULN) alleges that the defendants used “Baiting Orders” — placing deceptive sell orders to suggest the stock was falling, prompting others to sell. The defendants would then cancel their orders and buy shares at the artificially lowered prices.

In denying the motion to dismiss, the Court found that Mullen had identif[ied] a number of actions that differentiate the Defendants from typical market participants. Defendants placed far more orders for sell-side shares that were subsequently canceled and then purchased far more shares at depressed prices following spoofing episodes[.] The Court also noted, Defendants placed and then cancelled a high volume of Baiting Orders within seconds and even milliseconds, repeating this pattern thousands of times, often with multiple episodes per trading day. It concluded that the complaint outlines Defendants’ efforts to artificially depress the price of Mullen securities and the subsequent effects on the market.

David Michery, CEO and chairman of Mullen Automotive (MULN), commented: We are pleased with the Court’s decision and look forward to continuing our fight to protect our company and our shareholders.

Stephen W. Tountas, lead attorney for the plaintiffs, added: We look forward to commencing discovery to expose Defendants’ pervasive and manipulative trading practices, which have significantly harmed both Mullen and its shareholders.

This article was written by: Anonymous

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