Lunai Bioworks, Inc. (NASDAQ: LNAI) announced it has filed a federal securities fraud lawsuit in the U.S. District Court for the District of Delaware, alleging that unidentified naked short sellers engaged in a coordinated scheme to manipulate trading in the company's common stock. The lawsuit, filed by national law firms Dickinson Wright and Fox Rothschild, claims repeated violations of SEC Regulation SHO, including failures to deliver shares that reached as high as 234.6 times the maximum baseline daily rate. According to the complaint, periods of alleged failures to deliver represented 81.6% of the company's total outstanding shares.
The complaint further alleges that certain trading activity exceeded Lunai's available share count. For example, more than 554 million shares were traded on March 17, 2026, representing 15.3 times the company's outstanding shares, and more than 100 million shares were traded on May 4, 2026. The lawsuit seeks compensatory and special damages, injunctive relief, and recovery of legal costs. Counsel for Lunai stated they intend to pursue expedited discovery to identify the unnamed defendants and seek emergency relief aimed at halting any ongoing manipulative trading.
Lunai Bioworks is an AI-driven platform for precision medicine that identifies targets for new therapeutics and biodefense countermeasures. The company has developed 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 in support of national security and biodefense applications through its AI platform.
The full press release is available at https://ibn.fm/XFOLP. Dickinson Wright is a general practice business law firm with more than 500 attorneys among over 40 practice areas and 16 industry groups, with 23 offices in the U.S. and Canada. Fox Rothschild is a law firm with approximately 1000 attorneys in 30 offices across major U.S. markets. Both firms have extensive experience in securities litigation and enforcement matters.
This lawsuit highlights the ongoing issue of naked short selling, which can artificially depress stock prices and harm companies and their shareholders. The outcome of this case could have implications for how such practices are addressed in the future.
