Announcement • May 01
Pomerantz Law Firm Announces Filing of Class Action Against Regencell Bioscience Holdings Limited and Certain Officers
Pomerantz LLP announced that a class action lawsuit has been filed against Regencell Bioscience Holdings Limited and certain officers. The class action, filed in the United States District Court for the District of Maryland, and docketed under 26-cv-01602, is on behalf of a class consisting of all persons and entities other than Defendants that purchased or otherwise acquired Regencell securities between October 28, 2024 and October 31, 2025, both dates inclusive, seeking to recover damages caused by Defendants’ violations of the federal securities laws and to pursue remedies under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, against the Company and certain of its top officials. Regencell is a purported early-stage bioscience company focused on the research, development, and commercialization of traditional Chinese medicine for the treatment of attention-deficit/hyperactivity disorder and autism spectrum disorder—two disorders generally considered incurable under current medical consensus. Regencell is a “controlled company” under the Nasdaq Capital Market’s rules. Per Regencell’s most recent annual report on Form 20-F, as of June 30, 2025, 88.8% of its shares were held by its directors and executive officers, with 88.6% of those shares owned by Defendant Yat-Gai Au. From the start of the Class Period through approximately mid-March 2025, Regencell’s ordinary shares generally traded at less than 30 cents per share. However, beginning in early May 2025, the price for these shares suddenly skyrocketed, closing at a Class Period high of $78.00 per share on June 17, 2025—a 48,650% increase from the start of the Class Period and an approximately 382% increase from just a week prior. By the following week, the Company’s share price had plummeted, closing in a range only slightly higher than $20.00 per share. As of the time of the filing of the complaint, Regencell’s ordinary shares traded around $27.00 to $29.00 per share, with a three-month average trading volume of approximately 167,380 shares. The meteoric rise in Regencell’s ordinary share price has no evident connection to any public disclosures regarding its underlying business fundamentals. Regencell has twelve employees, no approved or salable products, no revenue, and has incurred operating losses since its formation. Further, notwithstanding its stated goal of curing medical disorders that are widely considered incurable, the Company’s research and development costs were only $0.95 million and $1.07 million for the years ended June 30, 2025 and 2024, respectively. This stands in stark contrast with Regencell’s own representations that average research and development to marketplace cost for a new medicine is nearly $4 billion, and can sometimes exceed $10 billion. The Company itself has admitted that its stock price has experienced extreme price and volume fluctuations that have often been unrelated or disproportionate to the operating performance of the company. Notwithstanding the foregoing, Regencell has a market value of approximately $14 billion. At all relevant times, Defendants downplayed the likelihood and severity of, and/or risks related to, volatility in the market for Regencell’s ordinary shares, or else downplayed the potential role of market manipulation in generating said volatility. Defendants attributed any volatility largely to short-selling activity and unidentified third-party news and social media activity. The complaint alleges that, throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operations, and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (i) Regencell was vulnerable and/or subject to market manipulation; (ii) the resulting volatility in the market for the Company’s ordinary shares exposed Regencell’s investors to significant financial risk; (iii) all the foregoing subjected Regencell to a heightened risk of regulatory and/or governmental scrutiny and enforcement action, as well as significant legal, monetary, and reputational harm; and (iv) as a result, Defendants’ public statements were materially false and misleading at all relevant times. The truth began to emerge on October 31, 2025, when Regencell disclosed in a filing with the U.S. Securities and Exchange Commission that following recent volatility in the market for its Ordinary Shares, the Company received correspondence and a subpoena from the United States Department of Justice, indicating that the Department of Justice is conducting an investigation into the trading in its Ordinary Shares. Regencell said that the Department of Justice has requested the production of documents and communications concerning these and other corporate operational, financial and accounting matters and that the Company expects to continue to incur significant legal costs and other expenses in connection with responding to the investigation and may be required to pay fines, penalties, damages or settlement costs in excess of its insurance coverage, if any, related to the investigation. On this news, Regencell’s ordinary share price fell $3.09 per share, or 18.56%, to close at $13.56 per share on November 3, 2025.
