Luna Innovations $7.3M Securities Class Action Settlement

Shareholders who purchased or otherwise acquired Luna Innovations Inc. securities between May 16, 2022, and April 19, 2024, and experienced financial losses may be eligible to claim a cash payment from a class action settlement.

Luna Innovations Inc. agreed to pay $7.3 million to settle a class action lawsuit alleging it and certain executives made false and misleading statements about financial results and internal controls. The lawsuit claimed the company improperly recognized unearned revenue and maintained ineffective disclosure controls, which caused Luna’s stock to trade at artificially inflated prices.

Who is eligible to file a claim?

To be eligible for compensation from this settlement, individuals and entities must meet all of the following criteria:

• They purchased or otherwise acquired Luna Innovations Inc. securities (including common stock, call options or put options) between May 16, 2022, and April 19, 2024, inclusive.
• They suffered financial losses as a result of transactions in Luna securities during this period.

Both individual and institutional investors who purchased through a broker or custodian are part of the class.

How much is the securities payout?

The total settlement fund is $7,300,000. The amount each class member may receive depends on several factors:

• The total number of valid claims filed
• The number of shares, call options or put options purchased or sold
• The timing of each transaction during the class period
• The total recognized losses of all claimants

The settlement administrator will distribute payments on a pro rata basis according to a court-approved plan of allocation:

• The average distribution per common share is approximately $0.54 before deductions for attorneys’ fees, expenses, taxes, and notice and administration costs. Each investor’s actual recovery may be higher or lower depending on their individual claim and the total number of valid claims.
• The settlement administrator calculates each claimant’s payment using a recognized loss formula that considers how long the claimant held Luna securities during periods of alleged artificial inflation and when they sold those securities relative to corrective disclosures.
• Class members who sold all Luna securities before the first corrective disclosure on March 12, 2024, have a recognized loss amount of $0.
• Class members who held shares through one or more corrective disclosures on March 12, March 25, April 8 or April 19, 2024, have a recognized loss based on the decline in artificial inflation per share during the holding period.
• Class members who sold shares after the class period have a recognized loss of the average closing price during the statutory 90-day look-back period, which was $3.03 per share.

• The settlement caps option claims at 6.68% of the fund. It calculates call and put option losses using formulas in the plan of allocation that account for strike price, expiration and whether the option was exercised, expired or remained open at the end of the class period.
• If total recognized losses exceed the fund, the settlement administrator will reduce payments proportionally.
• Claimants whose calculated payment would be less than $10 will not receive a payout.

How to claim a settlement payment

Class members can file a claim online or download, print, and complete the PDF claim form and mail it to the settlement administrator. The claim deadline is Jan. 16, 2026.

Settlement administrator's mailing address: Luna Innovations Securities Litigation, c/o Epiq Systems Inc., P.O. Box 2876, Portland, OR 97208-2876

What proof or documentation is required to submit a claim?

All class members must provide their telephone number and the last four digits of their Social Security number or full taxpayer identification number.

They must also provide purchase, acquisition and sale information for all Luna securities, including:

• Trade dates
• Number of shares or option contracts purchased, acquired or sold
• Total purchase, sale or acquisition price

Claimants must provide documentation to support their transactions in Luna common stock, call options and put options. Acceptable forms of proof include:

• Broker confirmation slips
• Broker account statements
• Authorized statements from a broker containing the same transactional details as a confirmation slip
• Other documentation the claims administrator deems adequate

$7.3 million settlement fund

The settlement fund of $7,300,000 includes:

• Notice and administration costs: Up to $300,000 (estimated)
• Attorneys' fees: Up to $2,190,000
• Attorneys' expenses: Up to $150,000
• Service awards to class representatives: Up to $3,500 total
• Payments to eligible class members: Up to $4,660,000 (estimated)

Important dates

• Deadline to file a claim: Jan. 16, 2026
• Deadline to request exclusion: Jan. 27, 2026
• Fairness hearing: Feb. 17, 2026

When is the Luna Innovations securities settlement payout date?

The settlement administrator will issue payments to eligible claimants after it resolves any appeals and processes all claims and the court grants final approval of the settlement.

Why is there a class action settlement?

The class action lawsuit alleged Luna Innovations Inc. and certain executives violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 by making false and misleading statements that caused Luna’s stock to trade at artificially inflated prices. According to the complaint, the company improperly recognized unearned revenue, maintained ineffective disclosure controls and later restated its financial statements. When Luna issued corrective disclosures between March and April 2024, its stock price declined, allegedly causing investor losses.

The defendants denied all allegations of wrongdoing and liability but agreed to settle to avoid the costs, risks and delays of further litigation.

Sources

1. Class notice
2. Claim form
3. Settlement agreement
4. Settlement FAQ