A class action lawsuit filed in California federal court accuses four underwriters and an auditor of enabling a pump-and-dump scheme that weaponized stolen advisor identities.
The lawsuit, filed February 2 in the United States District Court for the Northern District of California, targets medical device company Picard Medical, Inc., its officers and directors, IPO underwriters WestPark Capital, Inc., Sentinel Brokers Company, Inc., R.F. Lafferty & Co., Inc., and American Trust Investments, as well as auditor MaloneBailey, LLP.
At the center of the allegations is a troubling scheme: fraudsters allegedly stole the identities of legitimate financial advisors to promote Picard stock through Facebook advertisements and private WhatsApp groups, luring unsuspecting retail investors with promises of guaranteed returns.
The lead plaintiff, Julianne Louie, claims she was drawn into one such WhatsApp group after clicking on a Facebook ad promoting stock advice. Court documents describe how she received instructions to purchase large quantities of PMI shares, with the buying volume so aggressive it triggered safeguards at her brokerage.
Picard Medical went public on September 2, 2025, listing on Nasdaq at $4.00 per share. The lawsuit alleges the IPO was deliberately structured with an unusually thin public float of approximately 5%, making the stock particularly vulnerable to manipulation. Only 4,250,000 shares were made available to the public out of more than 90 million total outstanding shares.
The stock subsequently skyrocketed to an intraday high of $13.68 on October 23, 2025, before plunging approximately 70% during after-hours trading that same day. Shares have since cratered to around $2.00.
The lawsuit points to WestPark Capital, the IPO's lead bookrunner, alleging the firm had "a well-known history of taking small, high-risk issuers public, including several micro-cap offerings that later encountered regulatory scrutiny or trading halts."
MaloneBailey, the company's auditor, allegedly issued clean audit opinions despite purported violations of Generally Accepted Accounting Principles and Public Company Accounting Oversight Board standards.
Edwin Dorsey, founder of The Bear Cave, a forensic financial research authority, reportedly flagged Picard as being manipulated by fraudsters as early as September 30, 2025, just four weeks after the IPO. Yet the defendants allegedly failed to warn investors until October 24, 2025, a day after the crash.
Louie claims she purchased approximately 25,331 shares at $12.40 on October 22, 2025, and sold five days later at prices ranging from $4.8725 to $4.89 per share.
The lawsuit brings claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, alleging false and misleading statements and a failure to disclose the fraudulent promotion scheme.
The case covers investors who purchased Picard securities between September 2, 2025, and October 31, 2025.
No determination on the merits has been made.
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