What's Happening?
Faruqi & Faruqi, LLP, a national securities law firm, is investigating potential claims against Klarna Group plc following allegations that the company and its executives violated federal securities laws.
The complaint suggests that Klarna made false or misleading statements and failed to disclose the risk of increased loss reserves shortly after its IPO. This risk was associated with Klarna's 'buy now, pay later' loans, which have a high-risk profile. The investigation follows Klarna's report of record revenue in its third quarter, alongside increased provisions for credit losses. The company posted a net loss of $95 million, with provisions for loan losses exceeding analyst estimates. As a result, Klarna's stock fell by 9.3% on November 18, 2025.
Why It's Important?
The investigation into Klarna's alleged securities law violations is significant as it highlights the potential risks associated with 'buy now, pay later' financial products. These products have gained popularity but also pose substantial risks to investors due to their high default rates. The outcome of this investigation could impact Klarna's financial standing and investor confidence, potentially leading to changes in how such financial products are regulated. Investors who suffered losses may seek legal recourse, which could result in substantial financial settlements or changes in Klarna's business practices.
What's Next?
Investors have until February 20, 2026, to seek the role of lead plaintiff in the federal securities class action against Klarna. The court-appointed lead plaintiff will oversee the litigation on behalf of the class. Faruqi & Faruqi, LLP encourages investors and individuals with information about Klarna's conduct to come forward. The firm is actively seeking whistleblowers, former employees, and shareholders to provide insights into the company's practices. The investigation may lead to further legal actions or settlements, depending on the findings.
