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Mullen Automotive Inc.’s stock
MULN,
rose 2.9% early Friday, after the electric vehicle maker filed a lawsuit against a group of investors for allegedly using “spoofing” to manipulate its share price between Nov. 9, 2021 and Nov. 9, 2023. Spoofing is the “submission and cancellation of buy and sell orders without the intention to trade in order to manipulate other traders,” the company said in a regulatory filing, citing the Securities and Exchange Commission’s definition. The SEC has described spoofing as a “harmful strategy” that is used by some high-frequency traders that creates the impression of substantial offer book imbalances as a way to manipulate prices. “During the relevant period defendants placed thousands of spoofing orders to sell to create the illusion that the share price of Mullen was declining. These orders were intended to “trick” or “bait” other investors into selling their shares which further drove Mullen’s share price downward,” said the filing. Mullen relied on the Nasdaq being an efficient market that was not being manipulated when it sold more than 5 billion shares at prices that it has since learned were artificially depressed by spoofing, causing the company to lose hundreds of millions of dollars, if not more, said the filing. The defendants in the suit are IMC, an Illinois limited liability company; Clear Street, a Delaware limited liability company; UBS, a Delaware limited liability company; and John Does 1 through 10, entities that include market makers, broker-dealers, subsidiaries, affiliates and sister companies of the defendants and defendants’ customers, whose identities are currently unknown. The suit has been filed in the Southern District of New York. Mullen’s stock has fallen 99.8% in the year to date, while the S&P 500
SPX,
has gained 19.4%.
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