Datavault AI (NASDAQ: DVLT) filed a federal lawsuit Thursday, July 10, in the Northern District of Illinois alleging securities fraud, defamation, and intentional tort tied to naked short selling and online misinformation. Filed by Dickinson Wright, the Complaint names unknown defendants—Does 1-50, Roe Corporations 1-50, and XYZ LLCs 1-50—and claims the short sellers used manipulative tactics including spoofing, layering, and marking the close while spreading defamatory falsehoods on Stocktwits and LinkedIn. The lawsuit seeks damages and potential civil RICO claims. Lead counsel Jacob Frenkel, Chair of Dickinson Wright's Securities Enforcement Practice, stated the action is aimed at holding accountable those responsible for conduct that has undermined Datavault AI's stock despite a string of positive disclosures, press releases, and strategic partnerships in 2025.
The legal action represents a significant escalation in the battle against alleged market manipulation tactics that have increasingly concerned regulators and public companies. The inclusion of civil RICO claims suggests the company believes there may be an organized pattern of illegal activity designed to artificially depress its stock price. This lawsuit could set important precedents for how courts handle similar allegations involving social media platforms and anonymous online actors in securities fraud cases.
The company's allegations point to sophisticated manipulation techniques that regulators have been increasingly monitoring. Spoofing involves placing orders with no intention of executing them to create false market signals, while layering uses multiple non-bona fide orders to manipulate prices. Marking the close refers to transactions executed near the end of trading sessions to influence closing prices. These tactics, combined with alleged misinformation campaigns on platforms like LinkedIn and Stocktwits, represent what the company describes as a coordinated attack on its market valuation.
For investors and market participants, this lawsuit highlights the evolving challenges in maintaining market integrity in the digital age. The case could have broader implications for how companies address anonymous online attacks and market manipulation, particularly as social media platforms become increasingly influential in shaping investor sentiment. The outcome may influence future regulatory approaches to combating similar tactics across the securities industry.
The legal action comes amid growing regulatory scrutiny of short selling practices and market manipulation. Recent years have seen increased attention from regulators like the SEC on abusive short selling tactics and the spread of misinformation through social media channels. This case could contribute to the evolving legal framework surrounding these issues and potentially lead to stronger enforcement mechanisms against market manipulation.
For more information about the company, visit www.datavaultsite.com. Additional news and updates relating to DVLT are available through the company's newsroom at https://ibn.fm/DVLT.
