Regencell Bioscience Holdings Limited Class Action Lawsuit – RGC

Introduction

A securities class action lawsuit has been filed against Regencell Bioscience Holdings Limited (NASDAQ: RGC) and certain of its top officials on behalf of investors who purchased or acquired Regencell securities between October 28, 2024 and October 31, 2025. The complaint alleges that defendants made materially false and misleading statements by downplaying the company's vulnerability to market manipulation and the resulting risks to investors, even as RGC's share price surged nearly 48,650% during the Class Period without any corresponding change in business fundamentals. The truth began to emerge on October 31, 2025, when Regencell disclosed that it had received a subpoena from the U.S. Department of Justice indicating a federal investigation into trading in its ordinary shares. On this news, RGC shares fell $3.09 per share, or 18.56%, to close at $13.56 on November 3, 2025, causing significant losses to investors.

Company Profile

Regencell Bioscience Holdings Limited 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. According to the complaint, the company, which has been publicly listed on the NASDAQ since July 2021, has twelve employees, no approved or salable products, no revenue, and has incurred operating losses since its formation. The complaint further alleges that the company reported research and development costs of only $0.95 million and $1.07 million for the fiscal years ended June 30, 2025 and 2024, respectively. Regencell is a controlled company under NASDAQ rules, with approximately 88.8% of its shares held by directors and executive officers, the vast majority by its founder, Chairman, and CEO, Defendant Yat-Gai Au.

Class Period

October 28, 2024 – October 31, 2025, inclusive.

Investors who purchased or acquired Regencell Bioscience Holdings Limited (RGC) securities during the Class Period may be entitled to seek recovery under the federal securities laws.

Allegations

The complaint alleges that throughout the Class Period, defendants made materially false and misleading statements regarding the company's business, operations, and compliance policies by failing to disclose that Regencell was vulnerable and subject to market manipulation. According to the complaint, this alleged manipulation drove extraordinary volatility in RGC shares. The stock generally traded at less than $0.30 per share from the start of the Class Period through mid-March 2025 before allegedly surging to a high of $78.00 per share on June 17, 2025, representing a 48,650% increase. Despite having no revenue and no approved products, Regencell had a market value of approximately $14 billion as of the time of the complaint's filing, larger than all but 20 of the 261 companies in the Nasdaq Biotechnology Index, according to the complaint and The Wall Street Journal’s January 2026 reporting.

The complaint alleges that Regencell's SEC filings, including its 2024 annual report on Form 20-F filed during post-market hours before October 28, 2024, and its interim financial statements filed on June 30, 2025, contained only generic, catch-all risk warnings about potential share price volatility that were not tailored to the actual known risks. Rather than disclose the company's susceptibility to market manipulation, defendants attributed the extreme price swings primarily to short-selling activity, potential "short squeezes," and unidentified third-party news and social media activity. The Individual Defendants, CEO Yat-Gai Au and Financial Controller Michelle Chan, signed Sarbanes-Oxley certifications attesting that these filings did not contain untrue statements of material fact or omit material facts necessary to make the statements not misleading.

Plaintiffs allege that defendants knew or recklessly disregarded that these disclosures were inadequate. Defendant Au owned in excess of 80% of Regencell's ordinary shares at all relevant times, meaning the massive rise in share price produced an enormous increase in his personal net worth and, according to the complaint, made him undoubtedly highly attuned to significant fluctuations in the stock price. The complaint further alleges that by concealing the company's vulnerability to manipulation, defendants failed to comply with SEC Item 105, which requires disclosure of material risk factors, and Item 303, which requires disclosure of known trends or uncertainties likely to have a material impact on business results. The resulting volatility exposed investors to significant financial risk and subjected Regencell to a heightened risk of regulatory scrutiny and enforcement action.

The Truth Emerges

On October 31, 2025, during post-market hours, Regencell filed its annual report on Form 20-F for the fiscal year ended June 30, 2025. For the first time, the filing disclosed that "following recent volatility in the market for our Ordinary Shares, the Company received correspondence and a subpoena from the U.S. Department of Justice, indicating that the DOJ is conducting an investigation into the trading in our Ordinary Shares." The company revealed that the DOJ had requested production of documents and communications concerning corporate operational, financial, and accounting matters.

Regencell further disclosed that it expected to "continue to incur significant legal costs and other expenses in connection with responding to the investigation" and acknowledged that it "may be required to pay fines, penalties, damages or settlement costs in excess of our insurance coverage, if any, related to the investigation." The company also warned that the investigation could result in administrative, injunctive, or other proceedings against the company and its directors, officers, or employees. According to the complaint, this disclosure revealed that the company's prior framing of the volatility as primarily a product of short squeezes and third-party media activity had omitted the material fact that Regencell was subject to a federal investigation into the trading in its ordinary shares.

Market Reaction

Following the October 31, 2025 disclosure of the DOJ investigation, Regencell's ordinary shares fell $3.09 per share, or 18.56%, closing at $13.56 per share on November 3, 2025, the first trading day after the after-hours filing. This decline reflected the market's absorption of the federal investigation and the associated risks of fines, penalties, and enforcement action. The drop came after a Class Period in which RGC shares had already plummeted from their June 17, 2025 high of $78.00 per share, and the November 3 closing price represented a steep decline from the levels at which many investors had purchased shares during the period of extreme volatility.

Next Steps

●       Lead Plaintiff Deadline: June 23, 2026

●       The Court will issue its order for lead plaintiff and counsel in the weeks after submissions are due.

●       The Court will then consider motion for class certification.

●       The Court will later consider a motion to dismiss.

Disclaimer: This shareholder alert is for informational purposes only and does not constitute legal advice. Consult a qualified attorney for personalized guidance. No specific outcomes are guaranteed.

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