NorthWest Biotherapeutics Inc (NWBO)

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Biotech Company Says Citadel Securities, Other Big Traders Manipulated Its Stock Price -- Update
Today 1:09 PM ET (Dow Jones)Print
By Justin Baer


A biotechnology company accused Citadel Securities LLC, Susquehanna International Group LLP and other Wall Street firms of driving down its stock price through a series of illicit trading tactics.

In a lawsuit filed Thursday in Manhattan federal court, Northwest Biotherapeutics Inc. alleged the market makers had repeatedly engaged in "spoofing," where traders place orders with an intent to fool other investors about a stock's demand and manipulate the price.

Northwest, whose shares trade over the counter, also sued Canaccord Genuity Inc., G1 Execution Services LLC, GTS Securities LLC, Instinet LLC, Lime Trading Corp. and Virtu Americas LLC.

"This frivolous lawsuit appears to be nothing more than an attempt by Northwest Biotherapeutics to divert attention away from its long history of governance and management failures, SEC charges for financial reporting lapses, and lawsuits from its own shareholders," a Citadel Securities spokesman said. "We intend to pursue any and all legal action against Northwest Biotherapeutics for making these false and baseless allegations, which only undermine the integrity of our capital markets."

Northwest's shares trade at about 83 cents. In 2019, the company settled allegations by the U.S. Securities and Exchange Commission that it failed to maintain internal control over its financial reporting.

A spokesman for Nomura, which owns Instinet, declined to comment. A spokesman for Virtu had no immediate comment. The other firms didn't immediately respond to requests for comment.





MUST HAVR HIT A NERVE.

"We have the hard data," said Laura Posner, a partner with Cohen Milstein Sellers & Toll who is representing Northwest. "It's hard to dispute actual transactions and patterns."

Spoofing, which was outlawed in 2010, has been at the center of a yearslong campaign by U.S. authorities to root out market manipulation. In August, a federal jury in Chicago convicted two former JPMorgan Chase & Co. traders who had been charged with spoofing in the gold market.

In the modern stock market, high-speed trading firms such as Citadel Securities and Susquehanna provide stock quotes throughout the day, executing orders from other investors while collecting a thin spread between the buying and selling price of the shares.

It is unclear from the data cited in the suit whether the alleged spoofing orders were placed on behalf of other investors, or by the firms themselves.

But Northwest argued that these market makers knew it was unlawful to execute the alleged trading tactics and should have had procedures in place to detect and prevent them.

The market makers, Northwest wrote, "deliberately engaged in repeated spoofing that interfered with the natural forces of supply and demand and drove (the company's) share price downward over the course of the relevant period."

Northwest said the alleged spoofing orders, which occurred between December 2017 and August 2022, battered the stock price even as the company released positive results from the trial of its lead product, a brain cancer treatment. In its suit, the company wrote that it had sold more than 49 million shares to raise money "at artificially depressed prices."

"One of the telltale signs of a manipulative spoofer is a rapid reversal of trading direction -- a lot of sell orders, followed by buy orders, followed by the cancellation of sell orders -- which suggest the original sell orders were not intended to be executed, but were merely a ploy to drive the price down to 'buy low,'" Northwest said in its complaint.

The company said it found thousands of spoofing episodes involving tens of millions of "baiting orders" over a five-year span, and was able to identify the market participants using trading data.

Write to Justin Baer at [e-mail]

Corrections & Amplifications

Northwest Biotherapeutics Inc. is suing Citadel Securities LLC and other Wall Street firms. An earlier version of this article incorrectly said the biotechnology company was suing Citadel LLC. (Corrected on Dec. 1)