Mullen Automotive Now Announces A Painful Reverse Stock Split

September 13, 2024

Updated on November 26, 2024

Mullen Automotive now announces a painful reverse stock split after it has desecrated shareholder value to stay alive.

Mullen Automotive, Inc. (NASDAQ: MULN), the electric vehicle manufacturer, has announced a 1-for-100 reverse stock split of its common stock, effective September 17, 2024, at 12:01 a.m. Eastern Time.

Reverse stock splits often stir debate among investors about their effectiveness in stabilizing a company’s financial position.

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Following the split, the company’s stock will continue trading on The Nasdaq Capital Market under the ticker symbol MULN, with trading adjusted for the split starting on the same date.

The new CUSIP number for the common stock after the split will be 62526P505, according to the company’s press release.

The primary purpose of this reverse stock split is to help Mullen comply with Nasdaq’s minimum bid price requirement of $1.00 per share.

However, there is no guarantee that the company will meet this requirement.

At a special stockholder meeting on September 9, 2024, shareholders approved the reverse stock split proposal, allowing a ratio between 1-for-2 and 1-for-100.

The board of directors opted for a 1-for-100 ratio, and Mullen will file a Certificate of Amendment to its Second Amended and Restated Certificate of Incorporation to implement this change.

Under the 1-for-100 reverse split, 100 shares of the common stock will be consolidated into one share.

Adjustments will also be made to outstanding equity awards, warrants, and convertible notes according to their terms.

However, the number of shares reserved under the company’s 2022 Equity Incentive Plan will remain unchanged.

Proportional adjustments will be made to the conversion prices of the company’s preferred stock as well.

No fractional shares will be issued; instead, all fractional shares will be rounded up to the nearest whole share.

This reverse stock split will apply uniformly to all stockholders, without altering their overall percentage of ownership, except for the rounding of shares.

Continental Stock Transfer & Trust Company will act as the exchange agent for the reverse stock split.

Registered stockholders with pre-split shares in book-entry form will not need to take any action to receive their post-split shares.

Those holding shares through brokers or other nominees will have their holdings automatically adjusted to reflect the split, in accordance with their broker’s processes.

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Citadel is now fighting the SEC on the market surveillance system known as CAT, which enables regulators to track trading activity.

Citadel Securities is spearheading an industry pushback against a proposal from exchanges like the New York Stock Exchange and Nasdaq that would require traders to help fund a new market surveillance system, known as the Consolidated Audit Trail (CAT), which has already incurred nearly $1 billion in costs.

Brokers are urging regulators to halt new billing schedules that would mandate their financial contributions to the CAT system, which serves as a comprehensive record of all activity in U.S. equities and options markets—often compared to a “Hubble Telescope” for financial markets.

Until now, exchanges have covered the costs of the CAT.

However, if the U.S. Securities and Exchange Commission (SEC) does not intervene soon, brokers will start receiving bills from the exchanges beginning Tuesday, as the exchanges seek to recover a portion of the promised costs.

The CAT was established after the 2010 flash crash, which made it difficult for investigators to determine the cause of a market drop that erased nearly $1 trillion in value.

The system has been fully operational since 2022, according to Financial Times.

The SEC directed national exchanges and Finra, which oversees brokers, to create the CAT, with the expectation that the trading industry would eventually bear a significant share of the expenses.

Last year, the SEC approved a plan requiring broker-dealers to cover two-thirds of the costs, while exchanges would cover the rest.

Initial payment plans were submitted in January but were suspended pending review, which has yet to be completed.

Last month, exchanges and Finra withdrew their initial payment plans and submitted revised ones with minor changes.

Unless the SEC issues another suspension, brokers will receive bills in October based on September’s trading volumes.

Several regulatory filings and letters from industry groups, including Citadel Securities, Virtu Financial, the American Securities Association, and Sifma, have urged the SEC to suspend the billing process.

Citadel Securities, led by Ken Griffin, warned the SEC that it might seek legal action if the billing is not halted by next week.

Also Read: “The Game is Rigged”, Says Ex-Citadel Data Scientist

The company criticized the new filings as an attempt to extract significant amounts from broker-dealers.

Citadel previously challenged the legality of the CAT funding model in a Florida court, in partnership with the ASA.

That case is still ongoing.

Exchange representatives, including those from the NYSE, Nasdaq, and Cboe Global Markets, declined to comment, as did Finra and the SEC.

However, exchange officials noted that they were instructed by the SEC to implement the CAT and that cost-sharing with the industry was always part of the plan.

They argue that increasing trading volumes have contributed to rising costs.

One executive involved in the CAT project stated, “We’re just recovering our costs. There’s no profit here,” emphasizing that the industry had been resistant to funding the system.

Brokers have raised concerns not only about the costs but also about accountability for any costly missteps during the CAT’s development, as well as the system’s annual operating budget, which now nears $200 million—about five times the original estimates from 2016.

In a market where big player such as Citadel have manipulated prices in their favor, reported inaccuracies, and have taken advantage of the industry — opposing any regulatory means that track its trading activity has been part of their mission for years.

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Also Read: BlackRock Is Now Hit With 54 Counts of Securities Violations

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