Netcapital Investors Should Act Now—Before the Next Shoe Drops
The SEC’s allegations are serious enough that investors should change how they approach new and existing investments made through the Netcapital portal.
The news that the Securities and Exchange Commission has sued Netcapital Inc. and five affiliated individuals for securities fraud has already been widely reported. Another recap of the headlines won’t help investors much.
What matters now is what investors should do.
The SEC’s allegations have not been proven in court, and Netcapital Funding Portal Inc. itself is not a defendant. Those qualifications matter. But after reading the SEC’s 56-page complaint, I believe three immediate precautions are warranted for anyone investing—or who has invested—through Netcapital.
Before writing this post, I reached out to my contact at Netcapital for comment and didn’t receive any feedback. Don’t read anything into that; things are moving fast! No one has time to keep up.
1. Subject every new Netcapital offering to extraordinary due diligence
I would not invest in an offering on Netcapital today without substantially increasing my normal level of due diligence.
That doesn’t mean every company raising money there has done anything wrong. There is no basis for such a conclusion.
It does mean I would no longer assume that an offering’s presence on the portal provides meaningful reassurance that the people, ownership, documents and representations behind the issuer have been adequately vetted.
That distinction follows directly from the SEC’s allegations. The Commission says the alleged fraud involved Regulation Crowdfunding offerings on Netcapital’s portal, that some documents connected with those offerings were forged, and that the offerings were undertaken “in furtherance of the scheme.” The complaint alleges that Netcapital Funding Portal Chief Compliance Officer Paul Riss helped facilitate some of those offerings.
That is especially troubling because crowdfunding intermediaries have explicit anti-fraud gatekeeping responsibilities. SEC guidance says an intermediary must deny access when it has a reasonable basis for believing an issuer or offering presents potential fraud or investor-protection concerns—and must deny access when it cannot adequately assess that risk.
For now, investors considering a Netcapital offering should independently scrutinize the issuer, its management, beneficial ownership, financial statements and material claims. Where meaningful money is at stake, getting help from competent accounting, financial or legal professionals may be worth the expense.
2. Establish direct contact with every Netcapital issuer you already own
If you own securities purchased through Netcapital, establish a direct relationship with the company now.
Get an investor-relations email address. Know how to contact the CEO or CFO. Determine who maintains the capitalization table or shareholder records. Download your subscription agreement, investment confirmation, Form C and amendments, relevant communications and any other records available through the portal.
Don’t make the portal your only connection to your investment.
Netcapital currently remains listed by FINRA as a registered funding portal. Nothing in the SEC complaint orders the portal to stop operating. But the possibility of operational disruption can no longer be dismissed as merely theoretical. My earlier review of Netcapital’s filings found substantial financial stress in addition to the enforcement proceedings.
If Netcapital were ever forced to discontinue operations—or simply became unable to provide the service investors have come to expect—investors should already know how to reach their portfolio companies directly.
That relationship may take effort to establish. Make the effort now, while there is no emergency.
3. Screen your portfolio against the companies identified in the complaint
This is perhaps the most urgent step for existing investors.
The SEC complaint identifies 11 “Portfolio Companies” that it alleges were controlled by John Fanning and were involved in the scheme: AceHedge, CountSharp, CupCrew, Cust Corp., Dark, Fantize, HeadFarm, NetWire, RealWorld.net, Reper and StockText.
If you invested in one of them, start gathering facts.
Preserve your offering documents, emails, investment confirmations, screenshots, financial disclosures and subsequent communications. Determine exactly what representations were made when you invested and whether any of the people, documents or representations associated with your investment appear in the SEC complaint.
Then consider talking with competent securities counsel.
The SEC has not established that every investor in these companies has a claim, much less that any particular claim would succeed. But the complaint alleges that some Reg CF offering documents were forged and that the offerings themselves helped advance the alleged scheme. Depending on the facts surrounding a particular investment, counsel can evaluate possible claims involving the issuer, officers, directors or other responsible parties—and whether directors-and-officers or other insurance could potentially contribute to a recovery.
Waiting until the SEC litigation concludes could be a mistake. Investors who believe they may have been harmed should obtain individualized legal advice rather than assuming the government’s case will protect their private rights.
I’m taking my own advice
I have investments in three companies whose securities I purchased through Netcapital.
All three investments were made during the years in which the SEC alleges the fraudulent conduct was occurring. Collectively, they represent less than 3 percent of my regulated investment crowdfunding portfolio.
I’m not proud to say that, but I’m also not going to hide it.
I will be doing precisely what I am recommending to other investors: conducting fresh diligence, establishing direct communication with the issuers and checking my holdings carefully against the SEC’s allegations.
Why the allegations justify this level of caution
The SEC’s complaint is not about an immaterial accounting error.
The Commission alleges that from approximately October 2021 through January 2024, Netcapital improperly recognized approximately $13.9 million in revenue from sham consulting agreements involving 11 companies allegedly controlled by Fanning. The SEC says that represented approximately 77 percent of Netcapital’s reported revenue during the period and overstated revenue by approximately 345 percent. It further alleges that Netcapital raised more than $25.6 million from investors while financial statements containing the inflated revenue were being used or incorporated into securities offerings.
More troubling for crowdfunding investors, the SEC alleges that the Reg CF offerings themselves played a role.
According to the complaint, portfolio-company offerings provided observable prices that Netcapital could use to value equity received under the allegedly sham consulting agreements. The SEC alleges that offering-related documents were forged and that the portfolio companies uniformly sought no more than $124,000, allowing them to use management-certified financial statements rather than undergo the greater independent scrutiny required for larger offerings at the time.
The Funding Portal is not a defendant in the SEC case. That fact should be stated clearly.
It should not be mistaken for an exoneration.
This may be the first shoe, not the last
There is another reason investors shouldn’t assume Monday’s complaint resolves the regulatory uncertainty.
Netcapital previously disclosed an ongoing FINRA investigation, including subpoenas and testimony requests involving the company and certain current and former officers and employees. FINRA specifically requires funding-portal members to maintain supervisory systems reasonably designed to ensure compliance with securities laws and FINRA’s Funding Portal Rules.
FINRA has not publicly announced a disciplinary case against Netcapital Funding Portal that I have found. But if its investigation continues, it could address the portal’s conduct more directly than the SEC’s complaint does.
There is also the possibility of criminal scrutiny. The SEC brought a civil case. It does not prosecute crimes, although its Enforcement Division can refer potential criminal violations to federal or state law-enforcement authorities. I have found no public evidence that the Netcapital matter has been referred to the Department of Justice or that DOJ is pursuing a criminal case.
That possibility should therefore be treated as exactly that: a possibility, not a prediction.
For investors, however, waiting to see whether another regulator acts misses the point.
Crowdfunding depends heavily on trust—in issuers, intermediaries and the disclosure process. The SEC has made allegations serious enough to undermine that trust with respect to historical activity surrounding Netcapital.
The appropriate response isn’t panic. It is diligence.
Investigate before investing. Build direct relationships with companies you already own. Preserve your records. And if your investment appears anywhere near the conduct described in the SEC complaint, find out now whether you need professional advice.
We share educational information—not investment or legal advice. Investors should consult qualified professionals regarding their own circumstances.
Max-Impact Members
(We’re grateful for every one of these community champions who make this work possible.)
Brian Christie, Brainsy | Cameron Neil, Lend For Good | Carol Fineagan, Independent Consultant | Eric Coury, Arthia AI | John Berlet, CORE Tax Deeds, LLC. | Justin Starbird, The Aebli Group | Ken Steele, Rotarian | Lory Moore, Lory Moore Law | Marcia Brinton, High Desert Gear | Mark Grimes, Networked Enterprise Development | Mike Babbit | Coledger Solutions | Mike Green, Envirosult | Nick Degnan, Unlimit Ventures | Paul Lovejoy, Stakeholder Enterprise | Pearl Wright, Global Changemaker | Scott Thorpe, Philanthropist | Sharon Samjitsingh, Health Care Originals | Add Your Name Here
Upcoming SuperCrowd Event Calendar
Join the SuperCrowd Impact League! You can be recognized for making impact investments via Reg CF. See how your activity compares to your peers. It’s free. Win valuable prizes. Start now!
SuperCrowd Impact Member Networking Session: Impact (and, of course, Max-Impact) Members of the SuperCrowd are invited to a private networking session on August 11th at 8:00 PM ET/5:00 PM PT. Mark your calendar. We’ll send private emails to Impact Members with registration details. Upgrade to Impact Membership today!
SuperCrowdHour, August 19, 2026, at 12:00 PM Eastern. Devin Thorpe, CEO and Founder of The Super Crowd, Inc., will lead a session on “How to Make Money As an Impact Investor Starting with $10.” Drawing on his experience as a former investment banker, impact investor, and crowdfunding expert, Devin will demonstrate how anyone can begin building wealth while investing in companies that create positive social and environmental impact—even with as little as $10. In this session, he’ll explore how impact crowdfunding has opened investment opportunities to everyday investors, explain how to identify promising mission-driven companies, and share practical strategies for building a diversified portfolio over time. Attendees will learn how to get started with limited capital, manage risk, evaluate investment opportunities, and avoid common mistakes new investors make. Whether you’re completely new to investing or looking for an affordable way to expand your impact investing portfolio, this SuperCrowdHour will provide actionable insights to help you invest with purpose, build long-term wealth, and make a meaningful difference. Register now!
SuperCrowd26 featuring PurposeBuilt100™: This August 25–27, founders, investors, and ecosystem leaders will gather for a three-day, broadcast-quality global experience focused on disciplined capital formation, regulated investment crowdfunding, and purpose-driven growth. We’re bringing together leading voices in impact investing, compliance, digital marketing, and circular economy innovation to deliver practical frameworks, real-world case studies, and actionable strategies. The event culminates in the PurposeBuilt100™ Showcase, recognizing 100 of the fastest-growing purpose-driven companies in the U.S. Register now to secure your seat and get all the details. August 25–27, streaming worldwide.
Apply for the Superpowers for Good Live Pitch: Are you raising capital through Regulation Crowdfunding? Apply by September 2 for the September 30 Superpowers for Good Live Pitch. Selected founders pitch free to investors and gain exposure through SuperCrowd.tv, e360tv, social media, and our 10,000-subscriber newsletter. We especially encourage social entrepreneurs, women and underrepresented entrepreneurs to apply.
Visit Our Complete Community Event Calendar
If you would like to submit an event for us to share with the 10,000+ changemakers, investors and entrepreneurs who are members of the SuperCrowd, click here.
Manage the volume of emails you receive from us by clicking here.
We share educational information—not investment advice. Some links may generate compensation. See our full disclosure.