Citadel, Instinet, Virtu, Canaccord face spoofing lawsuit brought by NWBO
Northwest Biotherapeutics Inc. (NWBO) has filed a complaint against Canaccord Genuity LLC, Citadel Securities LLC, G1 Execution Services LLC, GTS Securities LLC, Instinet LLC, Lime Trading Corp., Susquehanna International Group LLP, Virtu Americas LLC, alleging that the defendants used spoofing to interfere with NWBO’s share price.
The complaint, seen by FX News Group, was submitted on December 1, 2022 at the New York Southern District Court.
According to the plaintiff, the case arises from the defendants’ scheme to manipulate NWBO’s share price during the period of December 05, 2017 to August 1, 2022 (the “Relevant Period”).
The complaint alleges that, throughout the Relevant Period, the defendants deliberately engaged in repeated spoofing that interfered with the natural forces of supply and demand, and drove NWBO’s share price downward repeatedly over the course of the Relevant Period. The defendants are accused of violating Section 10(b), Rule 10b-5 and Section 9(a)(2) of the Securities Exchange Act of 1934, and of fraud under New York state common law.
NWBO is a clinical stage biotechnology company focused on the development of personalized cancer vaccines. Despite the string of encouraging news about its lead product, NWBO’s share price has not followed suit. Quite the opposite actually. The plaintiff alleges that because of Defendants’ spoofing, NWBO’s share price has dropped.
Spoofing is a form of market manipulation that, in this case, was allegedly accomplished by placing “Baiting Orders” in the Limit Order Book or Inter-Dealer Quotation System (“IDQS”) that are not intended to be executed and have no legitimate economic purpose. The purpose of these Baiting Orders is to create a false illusion of market interest (either positive or negative) that will generate a response from other market participants that the spoofers can use to their advantage.
The complaint alleges that, during the Relevant Period, the defendants engaged in spoofing to manipulate the price of NWBO shares on OTC Link LLC and NYSE ARCA Global OTC, thus creating an imbalance in the market for NWBO shares and inducing other market participants to buy or sell at artificial prices.
The defendants allegedly placed tens of millions of Baiting Orders and executed millions of orders at manipulated prices during the Relevant Period. Indeed, Defendants engaged in spoofing on 395 of 1,171—or nearly 34%—of the trading days during the Relevant Period.
Plaintiff NWBO sold over 49 million shares at manipulated prices as a result of Defendants’ actions, the complaint states.
NWBO says that by repeatedly and brazenly manipulating the market through their spoofing, the defendants directly impacted the price of NWBO’s shares in the market, causing it significant losses as it sold millions of shares of NWBO stock at artificially depressed prices.
The plaintiff requests that the Court enter a judgment finding that the defendants violated the federal securities and New York state laws and ordering the defendants to pay damages as a result of their unlawful conduct in an amount to be determined at trial.