The litigation centers on whether PicS misled shareholders regarding its classification of financial assets and expected credit losses. According to the complaint, the company identified flaws in its credit evaluation framework in December 2025 but did not disclose these internal findings during its January IPO. These internal assessments reportedly led to the reclassification of approximately R$590 million in exposures from Stage 2 to Stage 3, triggering an incremental charge of R$88 million for the quarter ending December 31, 2025.

Evidence cited in the investigation suggests a sharp deterioration in credit quality that was absent from public offering materials. The complaint notes that the formation rate of Stage 3 loans—those classified as credit-impaired—jumped from 3.8% in the third quarter of 2025 to over 7% by the fourth quarter. This trend continued into 2026, with the company’s June 2 disclosure revealing a 13% spike in Stage 3 loans. Reed Kathrein, the Hagens Berman partner heading the firm’s investigation, stated that the inquiry specifically targets the potential negligence behind the company’s failure to alert investors to these adverse shifts in its credit processes before the stock hit the market.