Dickinson Wright Files Lawsuit Against ‘John Doe’ ‘Naked’ Short-Sellers of Datavault AI Common Stock

WASHINGTON, D.C., July 10, 2025 (GLOBE NEWSWIRE) -- via IBN – On Thursday, July 10, 2025, Dickinson Wright filed a lawsuit on behalf of the law firm’s client, Datavault AI, Inc. (Nasdaq: DVLT), (Datavault AI), alleging securities fraud (stock manipulation), defamation and intentional tort against “John Doe” “naked” short sellers of Datavault AI common stock on the Nasdaq Stock Market. The Complaint alleges that the short sellers engaged in the unlawful practice of “naked short selling” and other manipulative devices – including marking the close, painting the tape, spoofing and layering. The Complaint further alleges that the “John Does” for themselves or acting in concert with the “naked” short sellers also published materially false and misleading and defamatory information on internet chat room “Stocktwits” and on LinkedIn. The lawsuit, filed in federal court in Chicago, seeks unspecified compensatory and special damages and other relief.

Jacob Frenkel, Securities Enforcement Practice Chair at Dickinson Wright PLLC and lead counsel for Datavault AI, stated: “This lawsuit on behalf of our dynamic client Datavault AI challenges the too-often abusive, fraudulent and manipulative practice of ‘naked’ short selling, illegal behavior that is a scourge on early stage and entrepreneurial public companies. My expectation is that once we identify the perpetrators of these activities that the Department of Justice and the SEC have determined to be actionable, I am encouraged that the evidence will support amending our lawsuit to add civil RICO – civil racketeering – allegations against the soon-to-be known violators.”

Datavault AI (Nasdaq: DVLT), as set forth in the lawsuit, rebranded earlier this year to reflect its focus on AI-driven data visualization, valuation, and monetization, alongside high-performance computing solutions. Datavault AI’s operations and product offerings come from the company’s two core business divisions -- data science and acoustic science. The company’s proprietary software uses blockchain, AI, and machine learning to enable secure data management, real-time valuation, and tokenization. The Complaint tells the company’s story for 2025 -- referencing its strategic partnerships formed this year, reviewing its eight material disclosures of positive news reported to the SEC, touching on its financial performance as reported in three SEC filings, and highlighting seven press releases each of which mention favorable business developments. The Complaint then juxtaposes this positivity against the fraudulent, manipulative, unlawful and defamatory conduct of the defendants, which has depressed the company’s stock price despite all of the positive news. Frenkel noted that “such lawsuits are a platform from which a company can pursue significant compensatory damages.”

“Naked” short selling is illegal but remains a pervasive trading practice that often goes undetected. The SEC has conveyed in the past its belief that “naked” short selling undercuts the stability of financial institutions and undermines investor confidence in U.S. markets. The SEC also has stated that this practice “disrupt[s] the functioning of the securities markets that could threaten fair and orderly markets.” Frenkel, who has provided expert domestic and international media commentary over many years regarding damaging “short and distort” schemes and “naked” shorting then added: “Given my background with the SEC’s Enforcement Division and as a state and federal criminal prosecutor, I look forward to holding accountable those individuals and pursuing aggressively through our judicial system those who have intentionally and fraudulently harmed Datavault on our markets.” 

The Complaint, filed as Data Vault AI, Inc. v. Does 1-50, Roe Corporations 1-50, and XYZ LLCs 1-50, bears case number 1:25-cv-07815 in the United States District Court for the Northern District of Illinois, Eastern Division. The Judges presiding over the case are the Hon. Joan Gottschall and Magistrate Judge Young B. Kim. Jacob Frenkel (Member, Washington, D.C.) is lead counsel to Datavault AI, and Brooks Westergard (Member, Reno) and David Becker (Member, Chicago) also are litigation counsel to Datavault AI.

About Dickinson Wright’s Government Investigations and Securities Enforcement Practice
Dickinson Wright’s team of experienced former federal and state regulators and prosecutors 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. Our practice also includes federal grand jury proceedings, internal investigations for audit committees and boards of directors, special litigation committees of boards of directors, securities class action litigation, stockholder derivative and corporate governance litigation, and the defense and pursuit of whistleblower claims. The team brings deep experience and insight -- having been on both sides -- and judgment to all matters, capable of advancing creative and aggressive strategies when warranted.

About Dickinson Wright
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 offers our clients a distinctive combination of superb client service, exceptional quality, value for fees, industry expertise, and business acumen. As one of the few law firms with ISO/IEC 27001:2013 certification and one of the only firms with ISO/IEC 27701:2019 certification, Dickinson Wright has built state-of-the-art, independently-verified risk management procedures, security controls, and privacy processes for our commercial transactions. Dickinson Wright lawyers are known for delivering commercially-oriented advice on sophisticated transactions and have a remarkable record of wins in high-stakes litigation. Dickinson Wright lawyers are regularly cited for their expertise and experience by Chambers, Best Lawyers, Super Lawyers, and other leading independent law firm evaluating organizations.

Lead Counsel Contact: Jacob Frenkel, Chair, Government Investigations and Securities Enforcement Practice, 202-466-5953, jfrenkel@dickinsonwright.com

Firm Media Contact:  Kelly Durso, Associate Director of Marketing Communications, 313-223-3085, kdurso@dickinsonwright.com

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