Luna Innovations Incorporated (LUNA) Securities Fraud Class Action

Luna Innovations Incorporated (LUNA) Class Action:

Luna Innovations, the Roanoke-based fiber optics company, is in freefall. A cascade of leadership exits, a class-action, and the ongoing fallout from accounting errors have left the company reeling and shocked its investors.

Executive Exodus Raises Questions

On May 1, 2024, just after the market closed, Luna announced the abrupt departures of both its Chief Technology Officer, Brian Soller, and its Chief Financial Officer, George Gomez-Quintero. Soller’s termination was deemed "for cause," while Gomez-Quintero resigned without a severance package.

These departures follow the mysterious exit of CEO Scott Graeff in March, whose separation agreement now faces potential clawbacks due to alleged misconduct. Additionally, seven other Luna employees have been fired.

Accounting Errors Cast Doubt on Past Performance

The source of much of the turmoil lies in critical accounting errors related to revenue recognition. Luna's Audit Committee, with the help of external advisors, discovered these errors during a review of financial statements dating back to Mar. 31, 2022. These errors resulted in misstated financial results, rendering previously issued reports, press releases, and any communication regarding the affected periods unreliable.

Restatement Scope Widens, Stock Price Plummets

Initially, Luna only planned to restate financials for two quarters in 2023. However, the magnitude of the errors necessitated a wider scope, now encompassing all of 2022, the first quarter of 2023, and the previously mentioned quarters. The company’s disclosures have caused a massive selloff, sending Luna's share price plummeting. Since the initial disclosure of accounting issues on Mar. 12, 2024, the stock has lost more than two-thirds of its value. The full extent of the financial misstatements remains unclear.

Investor Lawsuit Looms

Luna’s improper revenue recognition has also led to an investor class action. While Hagens Berman is investigating the expansion of the current period, the existing securities class action brought on behalf of Luna investors against both Luna and its senior executives alleges that Defendants made misleading statements and failed to disclose that: (1) Luna’s financial statements from Aug. 10, 2023 to the present included false figures as a result of improper revenue recognition; (2) as a result, Luna would be required to restate financial statements filed during Aug. 10, 2023 through Nov. 14, 2023; and (3) it lacked adequate internal controls.

FREQUENTLY ASKED QUESTIONS ABOUT THE CASE

What is the LUNA securities class-action case about?

We are digging deeper into the potential fraud in light of Luna’s most recent disclosure, considering a longer class period.

WHAT SHOULD I DO?

I worked at LUNA. What should I do?

If you were an employee of LUNA, you may have valuable information that could be relevant to the lawsuit. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.

AM I ELIGIBLE?

What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.

CAN I PARTICPATE?

Am I affected? What do I need to do to participate?

If you were an investor in LUNA, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any LUNA investor participate?

In most class-action cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.