The lawsuit alleges that Netcapital misrepresented its financial health by improperly recognizing revenue from sham consulting agreements linked to defendant John Fanning. According to the complaint, these agreements were frequently backdated or forged, with the company providing little actual service in exchange for the reported income. These undisclosed transactions reportedly rendered the firm’s Sarbanes-Oxley certifications false, ultimately causing investors to suffer damages when the true nature of these operations came to light.

Parties interested in serving as lead plaintiff must file a motion with the court by December 7, 2026. While the litigation proceeds, investors are not automatically represented by counsel and may choose to retain their own attorneys or remain absent class members. Phillip Kim of The Rosen Law Firm is handling inquiries regarding the case, which centers on claims that the company’s public statements lacked a reasonable basis throughout the defined class period.