Lunai Bioworks, Inc. (NASDAQ: LNAI) has taken legal action against alleged naked short sellers, filing a securities fraud lawsuit in Delaware federal court. The complaint, filed by national law firms Dickinson Wright and Fox Rothschild, accuses unidentified defendants of engaging in a coordinated scheme to manipulate trading in Lunai's common stock, in violation of SEC Regulation SHO. The lawsuit highlights extreme levels of failures to deliver shares, reaching as high as 234.6 times the maximum baseline daily rate, with failures allegedly representing 81.6% of the company's total outstanding shares at certain periods.
According to the complaint, trading activity on specific dates far exceeded Lunai's available share count. For instance, on March 17, 2026, more than 554 million shares were traded, representing 15.3 times the company's outstanding shares. Similarly, on May 4, 2026, over 100 million shares changed hands. The lawsuit seeks compensatory and special damages, injunctive relief, and recovery of legal costs. Counsel stated they intend to pursue expedited discovery to identify the unnamed defendants and seek emergency relief to halt any ongoing manipulative trading.
Lunai Bioworks is an AI-driven precision medicine platform headquartered in Sacramento, California. The company identifies targets for new therapeutics and biodefense countermeasures, developing a cancer immunotherapy for solid tumors and proprietary technologies that transform complex biomedical data into predictive insights. Its platforms include Augusta, an AI-powered precision neurology platform, and a portfolio focused on central nervous system disorders. Lunai also pursues federal government contracts for national security and biodefense applications through its AI platform.
The lawsuit underscores the serious implications of alleged naked short selling, which can artificially depress stock prices and harm companies and their shareholders. By taking legal action, Lunai aims to protect its investors and hold accountable those who may have engaged in market manipulation. The case could also have broader implications for how companies respond to excessive short selling and failures to deliver shares.
Fox Rothschild LLP, with approximately 1,000 attorneys in 30 offices across the U.S., represents public and private companies in complex commercial litigation, securities law, and intellectual property matters. Dickinson Wright, a general practice business law firm with over 500 attorneys and 23 offices in the U.S. and Canada, has a strong securities and capital markets practice, particularly in securities fraud litigation and enforcement matters. Both firms are co-lead counsel in the case.
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