Mullen Automotive (NASDAQ:MULN), Acuitas Group, and Acuitas CEO Terren Peizer have a long and winding history. The three parties have been involved in several financing agreements in the form of dilutive equity and debt. Yesterday, the electric vehicle (EV) company announced that it had amended an agreement with Acuitas on March 2, completely ignoring the fact that its CEO was just charged with insider trading. The amendment would see Acuitas purchase Series D preferred stock and warrants worth $20 million with an exercise date of June 1.
On March 1, it was announced that the Securities and Exchange Commission (SEC) had charged Terren Peizer with insider trading for selling over $20 million worth of Ontrak (NASDAQ:OTRK) while in possession of material, nonpublic information (MNPI) concerning the company’s largest customer. Peizer stepped down as CEO of Ontrak following the announcement. The U.S. Department of Justice also announced criminal charges against the former CEO.
Let’s get into the details.
MULN Stock Alert: Mullen Financier Charged With Insider Trading
Peizer allegedly knew that Ontrak’s largest customer, who contributed over half of the company’s revenue, could terminate their contract. Between May and August 2021, he sold over $19.2 million worth of OTRK through a prearranged 10b5-1 plan established before May. He also attested that he was not in possession of MNPI.
On Aug. 19, the company announced that the customer had ended their contact, which caused OTRK to plunge by over 44%. In that same month, Peizer had established another 10b5-1 plan which resulted in the sale of 45,000 shares worth more than $1.9 million — the SEC noted that these two 10b5-1 plans saved Peizer over $12.7 million in losses.
Adding more fuel to the flame is Peizer’s ownership of MULN. An amended Schedule 13G filing shows that he owned zero shares of MULN common stock as of Dec. 31. At the same time, he also held warrants that could be exercised into 148.55 million shares and $32.86 million worth of convertible notes. Mullen’s resale filing, dated Feb. 16, noted that Acuitas would own just three shares of common MULN stock upon the completion of the offering.
This begs the question: Why does Mullen continue associating with Acuitas and Peizer? Desperation may be a factor here, as Mullen’s balance sheet is not for the faint of heart. As a result, more reputable organizations may hesitate to offer Mullen financing.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.