Why Is EV Maker Mullen Automotive Stock Gaining Traction Today?

Shares of Mullen Automotive Inc. MULN are trading higher on Monday.

The electric vehicle maker has effectively challenged an attempt to dismiss its lawsuit against multiple financial institutions.

The legal battle, currently advancing in the U.S. District Court for the Southern District of New York, alleges that IMC Financial Markets, Clear Street Markets LLC, UBS Securities, LLC, and unnamed defendants participated in stock manipulation schemes.

The lawsuit, covering the period from November 5, 2021, to November 15, 2023, claims that the defendants employed high-frequency algorithmic trading to distort Mullen’s stock value.

The company alleges violations of Section 10(b), Rule 10b-5(a) and (c), and Section 9(a) of the Securities Exchange Act of 1934, along with common law fraud under New York statutes.

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The Financial Industry Regulatory Authority (FINRA) defines spoofing as a fraudulent trading tactic that distorts market transparency by providing false signals about supply and demand.

Mullen asserts that the defendants employed “Baiting Orders” to create the false impression of a falling stock price, prompting other investors to sell.

After the price declined, the accused firms allegedly purchased shares at artificially low values before withdrawing their deceptive orders.

“We are pleased with the Court’s decision and look forward to continuing our fight to protect our company and our shareholders,” said Chairman and CEO David Michery.

In denying the defendants’ motion to dismiss, the court found that Mullen had presented sufficient evidence to distinguish the defendants from standard market participants.

The ruling noted that the defendants repeatedly placed and canceled a substantial number of sell orders in quick succession, often within milliseconds.

Price Action: MULN shares traded higher by 1.78% at $0.1171 at last check Monday.

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