All eyes are on Mullen Automotive (NASDAQ:MULN) after the company announced that it had filed a lawsuit against TD Ameritrade, its owner Charles Schwab (NYSE:SCHW), National Finance Services and John Doe defendants one through 10. The electric vehicle () company has alleged that these parties engaged in a scheme to manipulate the price of MULN stock.
“I am hopeful that this lawsuit sends a clear and unequivocal message to anyone considering any form of illegal trading of Mullen stock,” said CEO David Michery. “Our company has a zero-tolerance approach when it comes to manipulative trading practices. We believe the Company and its shareholders have been significantly harmed by certain traders and their brokers and market makers, such as the named Defendants in the lawsuit, that have facilitated this unlawful conduct.”
Mullen has stated that the lawsuit seeks “compensatory damages and injunctive relief.”
MULN Stock: Mullen Files Lawsuit Against Brokers
Mullen had previously retained law firm Christian Attar and market analytics firm ShareIntel in its fight against alleged illegal naked short selling of MULN stock. Christian Attar Senior Partner Wes Christian noted that the market manipulation scheme was created in order to “inject false and misleading information about Mullen into the market which has caused many shareholders to sell their investment in Mullen.”
The complaint docket alleges that the defendants “(1) sold fictitious Mullen shares in advance of the issuance of new shares by the Company for either their own proprietary accounts or their customers’ accounts; and/or (2) removed without authorization Mullen shares from their customers’ accounts to lend to other market participants or to cover their own short positions until new shares were issued.” As a result of these actions, Mullen believes that the defendants illegally increased the supply of MULN stock that was available for short selling.
Mullen also adds that it was “forced to complete two reverse splits of its shares” in response to these actions in order to remain listed on the Nasdaq. Furthermore, it believes that the defendants unlawfully sold over 34 million fictitious and/or shareholder-owned MULN shares between May 4 and Aug. 25. It’s not clear if this number has been adjusted on a reverse split basis. According to MarketWatch, an average of 47.12 million shares of MULN trade hands each day.
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On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.