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Mullen Automotive (NASDAQ:MULN) shares have fallen more than 99% so far this year, although the electric vehicle (EV) company believes other companies are responsible for the decline. Yesterday, Mullen announced that a federal spoofing lawsuit had been filed against the company UBS securities (NYSE:UBS), IMC financial markets, Clear street markets and John Doe, defendants one through ten.
Mullen alleges that the defendants engaged in the manipulation of MULN stock from November 9, 2021 to November 9, 2023 Law firm Christian Attar And Warshaw Burstein to assist with the case.
These two law firms, along with forensic investigators, have concluded that “the scale of spoofing is unprecedented and has resulted in over 5 billion shares being issued at artificially deflated prices since the company's Nasdaq debut in November 2021.”
MULN Stock: Mullen Files Federal Spoofing Lawsuit
As a result of this new lawsuit, Mullen has voluntarily dismissed the previously filed lawsuit TD Ameritrade, Charles Schwab (NYSE:SW), National Financial Services and other John Doe defendants back in August. That lawsuit alleged that defendants engaged in market manipulation by selling over 34 million fictitious and/or shareholder-owned shares of MULN over a three-month period.
“The company conducted a cost-benefit analysis of both cases and concluded that it would be a prudent business decision to pursue the larger spoofing litigation rather than the short selling litigation,” Mullen said.
What exactly is spoofing? Spoofing occurs when a market participant places a lure buy or sell order that the participant does not actually want to execute. Instead, the participant attempts to use this order to manipulate the stock price in order to persuade other market participants to place a buy or sell order. In the event of a spoofed sell order, the participant could purchase shares at a lower price and then cancel their original sell order.
Mullen has alleged that the defendants placed thousands of spoofing orders over the two-year period. Based on available data, it believes UBS is the biggest culprit and says the investment bank was involved with 431.03 million incitement order shares.
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At the time of publication, Eddie Pan did not hold, directly or indirectly, any positions in the securities mentioned in this article. The opinions expressed in this article are those of the author and are subject to InvestorPlace.com's publication policies.
Eddie Pan specializes in institutional investing and insider activity. He writes for InvestorPlace's Today's Market team, which focuses on the latest news on popular stocks.
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