Cecilia Lenk sat on Netcapital's board and led its advisory subsidiary. Then a federal court approved her settlement with the SEC. She resigned the same day — permanently barred from the securities business.
The United States District Court for the District of Massachusetts approved Ms. Lenk's settlement on August 19. Under its terms, she consented to be permanently enjoined from directly or indirectly participating in the purchase, offer or sale of any security — other than for her own account — and agreed to pay a civil penalty of $50,000, without admitting the SEC's allegations. She wrote in her resignation letter, filed as an exhibit to the 8-K, that the permanent injunction left her unable to continue serving as a director or to lead Netcapital Advisors Inc., the company's wholly owned subsidiary.
That kind of bar does not narrow a career — it ends it, for any role that involves handling or recommending securities on behalf of others. For shareholders, the harder question is the case Ms. Lenk was part of, which names Netcapital itself as a defendant and has not resolved.
Shares closed 126.83% higher at $0.5800 on August 26, on dollar volume of about $276 million. The free float is about 3.7 million shares; short volume was 55.48% of reported volume on the session.
Bloomberg Law reported that the SEC's complaint alleges the company overstated its revenue by 345% between October 2021 and January 2024, inflating it by about $14 million through consulting agreements that the agency says were, in some cases, forged. The SEC's litigation release says the alleged scheme ran alongside a fundraise of more than $25 million from investors.
The SEC filed the civil action on August 10, captioned SEC v. John Fanning, et al., naming Netcapital and five individuals — including current and former officers and directors — as defendants, according to the agency's litigation release and the 8-K. Ms. Lenk, who previously served as Netcapital's chief executive before the company's current leadership, is the first of the defendants to settle. The case against Netcapital and the remaining defendants is still pending.