Citadel Securities, Virtu Accused of Spoofing Biotech Stock (1)

Citadel Securities, Susquehanna International Group, Virtu Americas LLC and other firms were sued by a biotech company that accused them of intentionally depressing its share price through spoof trades.

Northwest Biotherapeutics Inc. claimed in a suit filed Thursday in Manhattan federal court Thursday that, beginning in late 2017 and continuing until August 2022, the market-making firms “deliberately engaged in repeated spoofing that interfered with the natural forces of supply and demand, and drove NWBO’s share price downward repeatedly.”

Bethesda, Maryland-based Northwest, which develops cancer-treating vaccines, said the firms made “at least hundreds of millions” of dollars by buying the company’s artificially depressed shares. According to Northwest, more than 49 million of its shares were sold at manipulated prices.

In addition to Citadel Securities, Susquehanna and Virtu, the suit names as defendants Canaccord Genuity LLC, Susquehanna’s G1 Execution Services LLC, GTS Securities LLC, Nomura Holdings Inc.’s Instinet LLC and Lime Trading Corp.

“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,” Citadel Securities spokesperson David Millar said in an emailed statement.

Susquehanna had no immediate comment. Virtu and Nomura declined to comment. Canaccord didn’t immediately respond to voice messages. GTS and Lime didn’t immediately return emails.

Northwest claimed a “particularly egregious example” of the defendants’ spoofing happened on May 10, after positive news about tests involving the company’s key drug, which is intended to treat patients with an aggressive form of brain cancer.

On that day, the defendants submitted “fictitious baiting orders” for 2,883,387 Northwest shares to induce traders to sell the stock and drive down the price, the company said in its complaint. According to the suit, Northwest suffered a 78% drop in its share price despite the positive news.

The case is Northwest Biotherapeutics Inc. v. Canaccord Genuity LLC, 22-cv-10185, US District Court, Southern District of New York (Manhattan).

(Updates with details from complaint in sixth paragraph)

--With assistance from Katherine Doherty.

To contact the reporter on this story:
Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net

To contact the editors responsible for this story:
Misyrlena Egkolfopoulou at megkolfopoul@bloomberg.net

Anthony Lin

© 2022 Bloomberg L.P. All rights reserved. Used with permission.