Netcapital Faces SEC Fraud Charges Over Alleged Revenue Inflation

Fintech company Netcapital has been accused by the U.S. Securities and Exchange Commission (SEC) of securities fraud after regulators alleged that the company significantly overstated its revenue through consulting agreements that did not represent genuine business transactions. The SEC’s civil complaint, filed in federal court in Boston, claims the alleged arrangements helped inflate Netcapital’s financial results and supported its efforts to raise millions of dollars from investors. citeturn0news15

SEC Alleges Nearly $14 Million in Inflated Revenue

According to the SEC, Netcapital reported almost $14 million in revenue tied to consulting agreements involving John Fanning, a co-founder of Napster and a developer associated with the Netcapital brand.

Regulators allege that the agreements were not legitimate commercial transactions and did not generate actual revenue for the company. The complaint also claims that some of the documents connected to these arrangements were forged.

The SEC argues that the alleged accounting practices substantially increased Netcapital’s reported earnings, creating a financial picture that was not representative of the company’s underlying business activity.

Fanning and Other Executives Named in SEC Case

John Fanning is among the individuals named in the SEC’s allegations. He continues to serve on Netcapital’s advisory board, while his wife, Coreen Kraysler, who serves as the company’s chief financial officer, has also been named as a defendant.

The SEC had previously issued Wells notices to several people connected with the matter in March. Such notices generally indicate that the regulator is considering enforcement action.

Netcapital has not publicly commented on the latest SEC charges, according to the latest reports.

Netcapital Already Facing Nasdaq Compliance Pressure

The SEC case adds to challenges facing Netcapital as the fintech company deals with separate stock-market compliance concerns.

The company has previously said that Nasdaq gave it until February 1, 2027, to regain compliance with its stock-price requirements and avoid potential delisting.

Netcapital operates an online private investment platform that connects companies seeking capital with investors. The company describes its business as providing digital access to private-market investment opportunities and capital-raising services.