SEC charges Netcapital with fraud over alleged revenue inflation

The U.S. Securities and Exchange Commission (SEC) has filed a civil complaint accusing Netcapital of securities fraud, alleging the fintech company inflated its revenue through sham consulting agreements. The SEC claims Netcapital improperly recorded nearly $14 million in revenue from these agreements, some of which were allegedly forged. This scheme purportedly enabled the Boston-based company to more than quadruple its reported revenue while simultaneously raising millions of dollars from investors.

Among the defendants named in the complaint are Netcapital's Chief Financial Officer, Coreen Kraysler, and John Fanning, a co-founder of Napster who created the Netcapital brand and sits on its advisory board. Fanning's wife, Kraysler, is also implicated. The SEC had previously issued Wells notices to several Netcapital defendants in March, signaling its intent to bring civil charges and offering them an opportunity to respond.

Separately, Netcapital announced earlier on Monday that Nasdaq staff had granted the company an extension until February 1, 2027, to regain compliance with stock price requirements and avoid potential delisting.