Federal Judge Orders Expedited Discovery to Identify 'John Doe' Defendants 'Naked' Short-Sellers of Lunai Common Stock

Federal Judge Orders Expedited Discovery to Identify 'John Doe' Defendants 'Naked' Short-Sellers of Lunai Common Stock

WASHINGTON, May 22, 2026 /PRNewswire/ -- On Wednesday, May 20, 2026, a United States District Court Magistrate Judge in Delaware granted the Motion of Lunai Bioworks, Inc. (Nasdaq: LNAI) (Lunai) to conduct expedited discovery to identify the "John Doe" "naked" short sellers of Lunai common stock on the Nasdaq Stock Market in late 2025 and throughout the first half of 2026. Co-lead counsel, Jacob Frenkel, Securities Enforcement Practice Chair at Dickinson Wright, stated: "This is the first step to amending the Complaint and holding accountable and pursuing substantial damages from the 'naked' short sellers who have caused real market harm to Lunai and its shareholders."

The Court's Order granted Lunai's Emergency Ex Parte Motion for Leave to Engage in Expedited Limited Third-Party Discovery filed on Monday, May 18, 2026, after carefully reviewing the governing legal precedent and establishing that Lunai, through counsel, established "good cause" to permit discovery before the more typical timing under the Federal Rules of Civil Procedure. In finding "good cause," the Court made the threshold determination that Lunai "established a prima facie case for each essential element of the claim(s) in question." The Court recognized that Lunai demonstrated "[a] that it has no other way to identify the alleged wrongdoers, aside from obtaining the discovery at issue[,] or [b] that expedited discovery is necessary because evidence identifying the defendants may be otherwise destroyed[.]" The Court concluded that Lunai "made a prima facie showing for each element of at least Counts I and/or II of the three counts … via the detailed allegations it made regarding an alleged scheme involving 'naked short selling and manipulative trading intended to depress [Plaintiff's] stock price[.]'" Additionally, in recognizing the need to take discovery beginning with broker-dealers and custodians, the Court acknowledged that "this type of information is 'uniquely held by market infrastructure entities and market participants.'" Moreover, the Court pointed out that the "timing" of the trading anomalies and urgency and the "context" also were factors supporting granting the Motion.

Co-lead counsel, Sidney Liebesman, Senior Litigation Partner in Fox Rothschild's Delaware office, added: "The Court appreciated both the gravity and time sensitivity of the need to commence discovery. Our courts in Delaware understand the harms that can be perpetrated against quality corporations, and we look forward to pressing this case aggressively on behalf of Lunai."

Lunai, through its two law firm counsel, will be issuing discovery to the broker-dealers and custodians identifiable as having traded Lunai stock as the first layer of discovery. According to the Motion and the 18-page, 21-items discovery request attached as an exhibit to the Motion, Lunai will be seeking, among many things, the identity of all investors who took naked short positions, confirmation that the naked short sellers had violated the law by not borrowing the stock, information regarding the number of shares sold short and the specific naked short sale transactions, and trading blotters.

On Monday, May 11, 2026, national law firms Dickinson Wright and Fox Rothschild joined forces to file the lawsuit on behalf of their firms' client, Lunai, alleging securities fraud (stock manipulation) and intentional tort against "John Doe" "naked" short sellers of Lunai common stock on the Nasdaq Stock Market. The Complaint seeks compensatory damages, which could multiply if Lunai amends the Complaint to assert civil RICO claims. Frenkel, a former federal prosecutor and SEC Enforcement lawyer, added that "such egregious conduct cries out for amending the Complaint to allege civil RICO. A civil RICO judgment against naked short sellers should reverberate across the market, and the Court permitting us to push discovery only advances that goal."

Lunai, as set forth in the lawsuit, is an AI-driven platform for precision medicine that identifies targets for new therapeutics and biodefense countermeasures. The company also has developed a cancer immunotherapy for solid tumors. The Complaint tells the company's story for 2025 to the present -- referencing an April 2025 strategic merger, a May 2025 launch of an AI-powered precision neurology platform, a November 2025 announcement of the company's next-generation dendritic cell immunotherapy having achieved complete regression of both primary and metastatic pancreatic tumors in preclinical humanized mouse models to mark a potential treatment, a March 2026 national initiative that uses artificial intelligence and cross-sector collaboration to accelerate the discovery and development of chemical countermeasures for emerging threats, an April 2026 deployment of an AI-powered platform for chemical threat assessment, and May 2026 intellectual property acquisitions that expanded Lunai's central nervous system platform.

The Complaint asserts three counts: (1) securities fraud under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; (2) market manipulation under Section 9(a) of the Securities Exchange Act of 1934; and (3) the intentional tort of wire fraud under 18 U.S.C. § 1343. Lunai seeks compensatory and special damages, injunctive relief, prejudgment and post-judgment interest, and recovery of costs and reasonable attorneys' fees. The defendants are identified in the complaint as Does 1-50, Roe Corporations 1-50, and XYZ LLCs 1-50, pending discovery that will reveal their true identities. Dickinson Wright and Fox Rothschild intend to pursue expedited discovery to identify the defendants and seek emergency injunctive relief to halt the ongoing manipulative trading.

The Complaint in Lunai Bioworks, Inc. v. Does 1-50, Roe Corporations 1-50, and XYZ LLCs 1-50, 1:26-cv-00549-CFC (filed Monday, May 11, 2026) is on file in the United States District Court for the District of Delaware. Jacob Frenkel (Dickinson Wright, Washington, D.C.), and Sidney Liebesman (Fox Rothschild, Wilmington, Delaware) are co-lead counsel to Lunai, and Brian Yu (Dickinson Wright, Washington, D.C.) also is litigation counsel to Lunai.

About Lunai Bioworks, Inc.
Lunai Bioworks, Inc. is a Delaware corporation headquartered in Sacramento, California. Lunai 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, patented technologies that transform complex biomedical data into predictive insights. Lunai's 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 in support of national security and biodefense applications through its AI platform.

About Fox Rothschild LLP
Fox Rothschild LLP is a law firm with approximately 1000 attorneys in 30 offices across major markets in the United States. Fox represents public and private companies, financial institutions, and individual clients in complex commercial litigation, securities law, intellectual property, corporate transactional matters, and related practice areas. Fox's Securities Litigation group has extensive experience representing issuers in federal court and before the SEC, as well as pursuing securities fraud claims against market manipulators and wrongdoers.

About Dickinson Wright PLLC
Dickinson Wright is a general practice business law firm with more than 500 attorneys among more than 40 practice areas and 16 industry groups. The firm has 23 offices in the U.S. and Canada, including Arizona, California, Colorado, Florida, Illinois, Kentucky, Michigan, Nevada, Ohio, Tennessee, Texas, Washington, and Washington, D.C. The firm's Canadian offices are located in Toronto and Windsor. Dickinson Wright has a strong securities and capital markets practice, with particular expertise in securities fraud litigation, enforcement matters, and complex commercial disputes. The firm's attorneys regularly represent public companies, underwriters, and investors in high-stakes securities litigation. The firm's Government Investigations and Securities Enforcement Practice regularly assists clients across all industries in formal and informal government investigations, enforcement proceedings, administrative actions and litigation by the SEC, PCAOB, FINRA, OTC Markets, DOJ (and US Attorney's Offices), securities exchanges, state regulators, and Congressional committees.

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SOURCE Lunai Bioworks Inc.