Lunai Bioworks, Inc. (NASDAQ: LNAI) has initiated a federal securities fraud lawsuit in Delaware, accusing unidentified naked short sellers of orchestrating a coordinated scheme to manipulate trading in the company's common stock. The lawsuit, filed by national law firms Dickinson Wright and Fox Rothschild, alleges 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, failures to deliver allegedly represented 81.6% of the company's total outstanding shares during certain periods.
The complaint details specific trading activity that purportedly exceeded Lunai's available share count. On March 17, 2026, more than 554 million shares were traded, representing 15.3 times the company's outstanding shares. On May 4, 2026, over 100 million shares were traded. 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 to halt any ongoing manipulative trading.
Lunai Bioworks is an AI-driven precision medicine platform based in Sacramento, California, focused on identifying 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. The company also pursues federal government contracts for national security and biodefense applications.
The lawsuit underscores ongoing concerns about naked short selling, a practice where sellers fail to deliver shares within the required settlement period, potentially driving down a stock's price. If proven, the allegations could have significant implications for market integrity and investor protection. The case highlights the challenges small-cap companies face in combating alleged market manipulation, as well as the legal recourse available under federal securities laws.
For more information on the lawsuit, the full press release is available at https://ibn.fm/XFOLP.
