Finally, A Major Breakthrough On An Underreported Criminal Conspiracy
Ramifications of Denial of the MTD in Northwest Biotherapeutics vs. Canaccord et. al.
Securities attorney William Burck assumed the role of Lt. Frank Drebin from the comedy classic The Naked Gun, when he described the Northwest Biotherapeutics (NWBO) spoofing case as “Nothing to see here” when he stated,
“…. this is a case about the plaintiffs trying to turn regular market activity, normal behavior by market makers into wide scale, unbounded spoofing.”
Burck from law firm Quinn Emanuel, representing his mammoth market maker client Citadel Securities a defendant in the case of Northwest Biotherapeutics (NWBO) vs. Canaccord et al. made that statement in the Southern District of New York (a Federal judicial district court) on November 14, 2023. Citadel accounts for almost 50% of all stock trades in the US on a daily basis, making it the largest market maker in the U.S. Billed as a “liquidity provider”, Citadel generates billions in revenues annually, and relies heavily on the use of secretive algorithms to do its bidding, I mean trading. These algorithms are designed to benefit their designers and users at the expense of both the investing public and the companies they target, such as NWBO.
Patrick McConilouge, the former head software engineer of trading at Citadel, who is now CEO of technology group Overline Network, commented on Citadel’s algorithms:
“The game is not fair and never has been. Individual investors, even when operating in a swarm, are destined to lose. How do I know? I helped design the system.”
I spent a number of years as an emerging markets investment manager for several large institutions. I invested in some of the most corrupt countries in the world and their markets were filled with fraudulent companies, managements, and lax, if any, regulatory oversight. But nothing that I saw in those markets match the scale, downright crookedness and evilness of the U.S. markets. This became apparent to me when I became a shareholder in NWBO. This company, its stock, and management have been the target of bogus lawsuits, price manipulation, slander, and a plethora of lies and falsehoods. This has been accompanied by blatant stock price manipulation using algorithmic trading strategies. All of this has been employed to destroy a company with a breakthrough treatment for the deadliest form of cancer – glioblastoma multiforma a brain cancer which has claimed the lives of several of my friends and family.
What Mr. Burck describes above as normal behavior is far from it. Two Federal Judges in the Southern District of New York have already identified potential unbounded spoofing when reviewing the preliminary evidence presented by plaintiffs in the Northwest Biotherapeutics vs Canaccord, et al case concerning the defendants’ Motion to Dismiss (“MTD”). In his latest ruling on the MTD, Judge Stein once again ruled that the defendants had engaged in manipulating NWBO’s stock price using spoofing with scienter (legalese for knowledge or intent of wrongdoing). The Defendants in the case are a who’s who of Wall St. market makers - Citadel Securities, Virtu Financial, Instinet, Jane Street, Canaccord, Lime Trading, G1 Execution and GTS Securities. In dismissing the MTD, Judge Stein held that the Defendants manipulations negatively impacted the price on a short-term basis and opened the door to present further evidence in any subsequent trial following discovery. The denial of the MTD in this case could be a huge step towards excising the rot from American markets and a major breakthrough in exposing the underreported criminal conspiracy on Wall St. What are the ramifications of this decision? Let’s have a look.
Discovery - Assuming Senior Judge Woods agrees with Magistrate’s Judge Stein’s decision, the next step would be Plaintiff’s extensive discovery backed by the Federal Court’s subpoena power. This further probing for the facts will likely not be limited to the seven named defendants, and may well include:
The Depository Trust and Clearing Corporation. The DTCC has records of the trading and settlement of NWBO trading which are not available to the public because the DTCC is owned by all the major investment banks.
Hedge Funds who traded in NWBO shares.
Several investment banks who are involved in stock lending and act as prime brokers for the hedge funds who also traded NWBO stock. Several of these have been fined for mislabeling millions of shorted stock transactions as long stock transactions creating billions of counterfeit shares.
Individuals involved in spreading false and malicious stories and rumors about NWBO in conjunction with what appears to be a plan to slow down and eliminate its existence.
Possible Criminal Charges - It is believed by some that the SEC is currently investigating a number of Wall St. firms for this type of criminal activity. In its Q2 2024 earnings report, Virtu Financial revealed that it was being investigated for a lack of transparency for certain SEC filings. In addition, Pam Bondi, the new head of the DOJ will likely speed up and expand any criminal investigations of Wall Street. President Trump, J.D. Vance, Devin Nunes, and other figures in the Administration are critical of Wall St. and especially Citadel Securities for their role in stock manipulation.
Possibility of Uncovering Coordinated Algorithmic Trading - It has long been believed that the algorithms that various Wall St. firms employ are often programmed to trade together. McConilogue’s quote cited earlier in this piece is just a foreshadowing of how deep this corrupt market making goes. Exposing the depths of this collusion to the light of day would be devastating for these firms as it would show a criminal conspiracy to suppress the stock price of NWBO and others.
Adam Feuerstein and StatNews - Over the course of 10+ years Mr. Feuerstein has been an unrelenting critic of NWBO. There have been a number of times when articles he has written have coincided with attacks on the NWBO stock price. While correlation is not causation, it will be interesting to see if there are any links between Feuerstein and the crooks behind the manipulation of the share price. In a court filing, Feuerstein was cited by the Defendants as a reason for the precipitous fall of the stock price of 81.2% from a $2.05 high on May 9th to a $0.3862 low on May 10, 2022, the day the company announced the successful results of it Phase 3 trial for its personalized dendritic cell vaccine DCVax-L.
May 9 & 10, 2022, NWBO Price Chart
The media group that employs Feuerstein, StatNews, is owned by a former hedge fund manager named John Henry. Henry is also owner of the Boston Red Sox, Pittsburgh Penguins and Premier League team Liverpool. In the video linked below, Dave Portnoy, owner of Barstool Sports, and a frequent player in financial markets had this to say about Henry, his use of algorithms, and the crookedness of our financial markets:
Click link to watch Dave Portnoy Video
As mentioned the use of algorithms features prominently in the NWBO case.
5. Launch of Civil Cases - Many people have sold stock in NWBO during the period when spoofing occurred. It is highly likely that some class action suits will be filed by shareholders against the market makers for these actions.
6. Are There Naked Shorts? - As mentioned above during discovery the records of the DTCC regarding NWBO will likely be requested. It is the view of many shareholders and other experts that there is a sizable naked short position in the stock. Some have put the number at over one billion shares. Will these naked shorts be closed out to avoid them being uncovered?
7. Impact on Valuation - In previous pieces the AI derived value of the market capitalization of NWBO was discussed. Currently, the range is between $2.8-14.7 billion with an average value of $8.7 billion against a current market value of $376 million. This shows the severe undervaluation of the stock caused by the market makers manipulation.
The denial of the MTD will help to close this valuation gap. This will probably lead to a settlement, and the company will get much needed revenue to not only fund its operations but additional trials and the expansion of manufacturing capabilities. This will add to the value of the company. In addition, NWBO has sold interests in the lawsuit which has provided immediate and importantly, non-dilutive funding.
8. NWBO – finally, this algorithmic spoofing has negatively impacted NWBO in numerous and outrageous ways. First, as a pre-revenue biotech, the company needs to raise money to fund operations, fund trials and pay for the approval processes. These market manipulations have kept the price of the stock artificially and continuously low, forcing Northwest to have to seriously dilute the share count when raising funds. The Defendants illegal actions have cost the lives of many GBM and other solid tumor cancer victims who otherwise could have been treated. Besides this appalling disregard for human life, the Company has had to issue many more shares than would otherwise have been needed to finance its continuing existence. The resulting damage of this manipulative spoofing and its impact on cancer patients and their families is immeasurable.
Lastly, with in-depth legal discovery as the next step, there is a real likelihood that some of the smaller Defendants will seek earlier settlements. Most of the Defendant’s might well be interested in avoiding nightly disclosures on the evening news about their illegal and organized efforts to destroy a small company with a safe, longer lasting, easier to administer, non-toxic, lower cost and effective treatment for one of the worst diseases on our planet.
This legal case can well prove to be an important milestone in restoring the health of the financial markets, as well as help to restore desperate patients’ confidence in this country’s fight against cancer. DCVax-L is a new hope for potentially conquering this awful disease that unfortunately effects populations worldwide. That DCVax-L is not widely known and available to the public is largely attributable to the Defendants and their cronies’ unsuccessful but determined efforts to destroy NWBO.
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