Thursday, December 7, 2023
Dividend Stocks

MULN Stock Alert: Mullen Says It’s Investigating ‘Failure to Deliver’ on Short Sales

Source: rafapress /

Shares of Mullen Automotive (NASDAQ:MULN) stock are in full focus today. The electric vehicle (EV) company announced that it has retained outside counsel to investigate potential market manipulation and illegal short selling. Mullen cited high levels of trading volume and failure to deliver (FTD) levels on short sales as the reasons behind the investigation.

The outside counsel, which was not immediately disclosed, will team up with Shareholder Intelligence Services (ShareIntel) to collect and analyze data from broker-dealers, clearing firms, and any other sources that could provide evidence of market manipulation. ShareIntel will also be able to provide Mullen with “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,” concluded Mullen in the press release.

MULN Stock: Mullen Launches Investigation into Alleged Market Manipulation

It appears that Mullen has finally responded to a petition penned by a shareholder last January. The petition, called “MULN Join Fight Against Illegal Trading,” has over 10,000 signatures. It asks Mullen’s board to create an Illegal Trading Task Force, similar to the one created by Genius Group (NYSEMKT:GNS), to investigate alleged market manipulation.

So, what exactly is FTD? It occurs when one party in a contract fails to deliver on their obligation. When shorting a stock, FTD can occur when the short seller does not own all or any of the shares at the time of settlement, which results in an obligation default. This could subsequently lead to the creation of “phantom shares,” which is detrimental to a company’s stock price due to its dilutive nature.

Based on data from Fintel, Mullen saw a relative spike in FTD shares from the end of January until the end of March. During March, a total of 205.42 million shares failed to be delivered. Mullen’s average daily trading volume is 263.97 million shares. FTD data for April is not yet available.

It should be noted that FTD, in the context of a naked short sale, may not be conducted with ill intent. “Because it may take a market maker considerable time to purchase or arrange to borrow the security, a market maker engaged in bona fide market making, particularly in a fast-moving market, may need to sell the security short without having arranged to borrow shares,” explained the SEC.

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 Publishing Guidelines. 

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media,

©2023 InvestorPlace Media, LLC

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