The Crowdfunding Professionals Association (CfPA) has issued a statement on the NetCapital (NASDAQ:NCPL) fraud allegations. As was recently reported, the Securities and Exchange Commission filed fraud charges alleging that NetCapital improperly recorded $14 million in revenue from consulting by John Fanning, a member of the Advisory Board.

The filing claims that NetCapital’s revenue was mostly derived from fraudulent portfolio consulting agreements with companies that Fanning allegedly controlled or owned significant portions of.

The suit also mentions Coreen Kraysler, NetCapital’s CFO and Fanning’s wife.

The CfPA stated:

“Regulated investment crowdfunding depends on the confidence of investors, issuers, intermediaries, regulators, and other market participants. Funding portals and broker-dealers play a critical role as intermediaries between issuers and investors.  The viability of investment crowdfunding depends on these intermediaries being held to high standards, and allegations that an industry participant engaged in fraudulent conduct are deeply concerning. CfPA has long advocated for transparency, accountability, and responsible practices in the regulated investment crowdfunding industry and will continue to do so.”

NetCapital, a publicly traded firm, has struggled to keep its listing compliant under Nasdaq rules, which require a minimum share price. Recently, the company said it was pivoting to provide services that support online capital formation beyond a securities offering pitched online.

Netcapital shares are currently trading around $0.32. Its 52-week high is $2.75.