Dickinson Wright Files Lawsuit Against “John Doe” “Naked” Short-Sellers of Datavault AI Common Stock
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On Thursday, July 10, 2025, Dickinson Wright filed a lawsuit on behalf of the law firm’s client, Datavault AI, Inc. (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 that “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.
To read the Complaint, please click here.
Jacob Frenkel, Securities Enforcement Practice Chair at Dickinson Wright PLLC and lead counsel for Datavault AI, stated that “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.
To read the Complaint, please click here.
