Lunai Bioworks, Inc. an AI driven precision medicine and biodefense company, today announced the filing of its First Amended Complaint in the United States District Court for the District of Delaware naming ten defendants, including three FINRA registered broker dealers, in connection with an alleged coordinated naked short selling scheme that the Company says generated failures to deliver on more than 81% of its outstanding shares. The Complaint makes clear that Lunai intends to add defendants who participated in the scheme upon confirming their identities through active continuing discovery and comprehensive mining of trading data and seeks a wider timeline of actively.
According to the Complaint, the named defendants and others sold short Lunai shares without borrowing or arranging to borrow the underlying securities as required under the federal law known as Regulation SHO, resulting in what the Complaint asserts are widespread failures to deliver, to enable what would otherwise be lawful short selling, during the period from November 2025 through May 2026. The Complaint alleges, using March 17, 2026, as an example, that 554,032,865 shares of LNAI traded in a single session, representing 15.3 times the Company’s then total number of issued shares, on a date on which independent market data confirmed there were zero LNAI shares available to borrow in the institutional lending market, with the annualized borrow rate reaching 621.45%, up from 49.5% four days earlier. Previously, on the first day of the scheme to defraud as presently alleged, on November 5, 2025, the volume in that trading session reached 7.25 times the total number of the Company’s then issued shares.
“The magnitude of this fraud is staggering – investors have lost real money, and it now is time for the fraudulent naked short sellers to be held responsible,” said Jacob Frenkel, co-lead counsel and Chair of the Securities Enforcement and Government Investigations Practice at Dickinson Wright PLLC. “Conduct of this nature underscores why investor protection is such a critical mandate. Having served in the SEC’s Enforcement Division and as a federal prosecutor, I would have found deeply gratifying pursuing such facts in my prior roles. I now am privileged to be on the side of a Company that has stepped forward to protect its business, its shareholders, and the integrity of its operations.”
“These filings mark real progress in our effort to hold accountable the parties who profited from illegally shorting our stock,” said David Weinstein, Chief Executive Officer of Lunai Bioworks. “Our investigation identified failures to deliver equal to more than 80% of our outstanding shares and single day trading volumes many multiples of our entire share count. We intend to pursue full accountability, including treble damages under the federal racketeering statute, and we will continue to name additional participants in this scheme as our investigation identifies them. Our review does not stop at the dates in this complaint. We are watching current trading in LNAI in real time, and our forensic analysis reaches backward as well, so anyone who engaged in illegal naked short selling of our stock, before this window or since, should expect to be found and named.”
The amended complaint asserts claims for securities fraud under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, market manipulation under Section 9(a) of the Exchange Act, civil conspiracy to defraud predicated on wire fraud, civil racketeering under the federal RICO statute, common law fraud, and tortious interference with contract arising from the Company’s Nasdaq listing agreement. Lunai is seeking compensatory and special damages, treble damages under the RICO statute, injunctive relief, prejudgment and post judgment interest, costs, and attorneys’ fees, and has demanded a jury trial.
Lunai is represented in this matter by Fox Rothschild LLP as Delaware counsel and Dickinson Wright PLLC as principal corporate and litigation counsel. The Company said its investigation into the trading activity described in the Complaint is ongoing, and it expects to amend the complaint further to additional participants as defendants. The claims and characterizations described in this release reflect allegations set forth in the Company’s First Amended Complaint, which remain to be proven in court.
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