Mullen Automotive (NASDAQ:MULN) has announced a new illegal shorting investigation regarding the high rate of FTDs as reported to the Securities and Exchange Commission (SEC).
In March, the company saw as many as 55 million FTDs in one single day.
FTDs, or Failure-to-deliver occurs when one party in a trading contract (whether it’s shares, futures, or options) fails to deliver on their obligations.
These failures derive due to buyers not having enough money to take delivery and pay for the transaction at settlement.
In the case of sellers, it means not having the goods to meet that transaction.
Failure-to-delivers can occur in options trading or when selling short naked, per Investopedia.
Mullen Automotive announced today that it is taking certain affirmative steps in light of the extraordinary trading volume and evidence of unusually high levels of failure to deliver on short sales as reported to the U.S. Securities and Exchange Commission.
These steps include retaining outside counsel, which is working with Shareholder Intelligence Services LLC (“ShareIntel”) to undertake a comprehensive analysis of data derived from broker-dealers, clearing firms and other sources to provide actionable intelligence on potential market manipulation and illegal short selling.
ShareIntel offers unique access and insight into shareholder position movements and the ability to proactively track equity flows and identify suspicious, aberrant and/or unusual trading activity.
As a fiduciary to its shareholders, the Company will do everything in its power to address any evidence of improper trading in Mullen securities.
Illegal Shorting in MULN Stock
Like many stock tickers in the market, MULN stock has become a target for illegal shorting, or naked shorting.
Naked shorting is the illegal practice of short selling shares that have not been affirmatively determined to exist.
The predatorial practice allows short sellers to short a stock without there actually being any stock available to short.
The SEC approved the use of naked short selling on IPOs in 2015 although it was deemed an illegal practice in 2010.
We’re seeing this become regular practice in the market which has been known to destroy companies, innovation, and shareholder value.
GNS CEO Roger Hamilton has been a strong advocate for tackling the problem in litigation.
In February, Global Tech Industries (GTII) followed suit and announced its board had authorized management to move forward with appropriate legal action in connection with what it believes to be illegal trading activity in the Company’s shares.
Roger Hamilton reached out to AMC CEO Adam Aron to join the fight against naked short selling, but the movie theatre CEO is more focused on company fundamentals than fighting Wall Street.
This Mullen naked shorting investigation may just be what the company needs to rid its stock suppression.
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