The U.S. Securities and Exchange Commission charged Netcapital with securities fraud on Monday over the fintech company’s alleged scheme to overstate revenue.
The SEC said in a civil complaint filed in Boston federal court that Netcapital improperly recorded nearly $14 million in revenue from consulting agreements with John Fanning, a co-founder of the music sharing service Napster who created the Netcapital brand.
The SEC said the consulting agreements, including some that were forged, were shams that produced no real revenue for the Boston-based company and enabled Netcapital to more than quadruple reported revenue while it raised millions of dollars from investors.
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Netcapital did not immediately respond to requests for comment after business hours. It said earlier on Monday that Nasdaq staff gave it until February 1, 2027, to regain compliance with requirements governing its stock price and avoid possible delisting.
Fanning sits on Netcapital’s advisory board. His wife, Coreen Kraysler, is Netcapital’s chief financial officer, and is among the other defendants.
The SEC issued Wells notices to several Netcapital defendants in March, indicating that it was preparing civil charges and giving them a chance to respond.