Spectral AI Inc (NASDAQ:MDAI) told investors that it has provided support to Nasdaq and the state securities authorities in Florida, Louisiana and Texas to bring their attention to the potential market manipulation of the company’s stock, primarily in the form of naked short selling.
The company said the inquiry is being led by Erich Spangenberg, a member of its board of directors and its largest shareholder.
Naked short selling occurs when shares are sold without first being borrowed or ensured that they can be borrowed, creating an artificial selling pressure that allows traders to drive down prices at the expense of retail investors.
Spectral AI noted that the practice of short selling is generally illegal per the Securities and Exchange Commission (SEC) Regulation SHO.
“As detailed in the company’s SEC filing today, a simple examination of our shareholder lists we obtained from reliable authorities clearly shows that our public float has been artificially increased by over 40% as a result of what I believe is illegal naked shorting,” Spangenberg said in a statement.
“We recognize and appreciate Nasdaq’s commitment to ensuring market transparency and integrity, and its mission to protect the interests of investors. It is in this spirit that we look forward to collaborating with all relevant authorities to address instances of potentially illegal naked short selling in our stock, strengthen compliance, and protect our investors.”
Dallas-based Spectral AI is focused on advancing medical diagnostics for faster and more accurate treatment decisions in wound care, with initial applications involving patients with burns and diabetic foot ulcers.