Allegations of Market Manipulation Against NWBO Spark Legal Battle

Key Takeaway

• Northwest Biotherapeutics accuses Virtu and Citadel Securities of "spoofing" to lower NWBO stock, despite positive trials.
• Manhattan court dismisses case against Citadel due to lack of evidence but acknowledges the plausibility of NWBO's claims.
• NWBO's planned refiling could expose high-frequency trading practices, signaling a shift in handling market manipulation allegations.

Allegations of Market Manipulation

Northwest Biotherapeutics has accused seven broker-dealers, including Virtu and Citadel Securities, of engaging in "repeated spoofing" to drive down the share price of NWBO. The company alleged that these firms placed millions of sell orders they had no intention of fulfilling, leading to a significant drop in NWBO's valuation despite positive clinical trial results. The lawsuit sparked interest among Redditors, who speculated about hedge funds' motives and governance issues within NWBO.

Legal Developments

A Manhattan court recently dismissed NWBO's case against Citadel and others, citing a lack of evidence tying the alleged trading to specific losses. However, the court acknowledged the plausibility of most of NWBO's claims, suggesting that the case could proceed further. Magistrate Gary Stein found the distinction between cancelled and reduced orders unconvincing and noted the potential impact of defendants' conduct on NWBO's stock price.

Market Impact and Future Actions

NWBO plans to refile its complaint, potentially leading to the discovery process where internal records and communications from the defendants could be revealed. The outcome of this case could shed light on the practices of high-frequency trading firms and their influence on global markets. While Citadel Securities dismissed the lawsuit as malicious, the court's decision signals a shift in the default stance of market-makers regarding allegations of market manipulation.