Netcapital (NCPL) Sham Consulting Revenue and Undisclosed Related-Party Transactions Case
$NCPL investors filed a claim against Netcapital Inc., its CFO, two former CEOs, and an advisory board member for touting revenue growth, while failing to disclose that the revenue came from sham consulting agreements with entities controlled by John Fanning and from undisclosed related-party transactions.
After the SEC filed a fraud complaint against Netcapital and its executives, the stock fell 12.8% on August 11, 2026, to $0.3501 per share. After its auditor resigned, the stock fell 28.6% on August 18, 2026.
$NCPL investors can join this case to be notified about potential recovery.
Case Details:
Netcapital operates an SEC-registered crowdfunding portal and provides consulting services to small companies. During the Class Period, it reported growing revenue, largely non-cash consulting revenue received as equity from “Portfolio Companies.” Its filings carried certifications signed by its CEOs and CFO.
On August 10, 2026, the SEC sued Netcapital, Fanning, CFO Coreen Kraysler, CEO Martin Kay, former CEO Cecilia Lenk, and another individual. The SEC alleged a fraudulent scheme in which consulting agreements with Fanning-controlled companies were backdated and in some cases forged, little or no consulting was provided, and the related-party ties were not disclosed. It further alleged that revenue was overstated by approximately 436 percent in certain quarters during Kay’s tenure.
On August 17, 2026, Netcapital disclosed that its auditor, Fruci & Associates II, had resigned over the SEC allegations. On September 3, 2026, it disclosed that director Avi Liss had resigned from the Board and its Audit Committee, citing the “serious allegations” in the SEC complaint. The stock fell 8.14% and 13.1% over the next two trading days.
Based on these events, $NCPL investors filed a claim against Netcapital, alleging the Company:
Improperly recognized material revenue from sham consulting agreements with entities controlled by John Fanning
Failed to disclose that the consulting agreements were backdated and in some cases forged
Failed to disclose that the Portfolio Company transactions were related-party transactions involving Fanning
Issued false Sarbanes-Oxley certifications
Investors argue that had the truth about Netcapital’s revenue and related-party transactions been disclosed, its stock would not have traded at artificially inflated prices during the Class Period.