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Time-Sensitive: Allegations Focus on Hidden Software Debt Concentration and Distressed Valuations

NEW YORK , April 16, 2026 /PRNewswire/ -- "Investors deserve transparency about material risks that could affect their investments. When a company allegedly reclassifies portfolio holdings to obscure concentration in a distressed sector, shareholders are denied the information they need to make informed decisions," stated Joseph E. Levi, Esq., managing partner of Levi & Korsinsky, LLP.

Levi & Korsinsky alerts investors in Hercules Capital, Inc. (NYSE: HTGC) of a pending securities class action. Class Period: May 1, 2025 through February 27, 2026. Check if you can recover your investment losses or contact Joseph E. Levi, Esq. at jlevi@levikorsinsky.com | (212) 363-7500.

HTGC shares fell $1.22, or 7.9%, closing at $14.21 on February 27, 2026, after corrective information reached the market. The Court has set May 19, 2026 as the deadline to apply for lead plaintiff appointment.

The Alleged Software Debt Concentration Scheme

A securities class action asserts that Hercules Capital systematically understated its exposure to the software lending sector. The lawsuit contends the Company assigned certain businesses that describe themselves as software companies to categories outside of software in its industry classification tables filed with the SEC each quarter. This alleged reclassification practice made it difficult for shareholders to assess the true concentration risk within the $5.7 billion portfolio.

Industry-Wide Software Debt Distress and Par Valuations

The action claims this misclassification was particularly harmful because of conditions across the broader private credit market:

• Billions of dollars in software sector debt across the industry had allegedly fallen into distressed territory during the Class Period
• Despite this industry-wide deterioration, the Company allegedly marked its own software debt holdings at 100 cents on the dollar
• Par valuations on software loans allegedly diverged sharply from observable market conditions for comparable credits
• By scattering software borrowers across non-software industry categories, the Company's quarterly filings allegedly masked the magnitude of this exposure
• Investors relying on reported industry sector tables could not identify the concentration that allegedly existed

Why Sector Classification Allegedly Matters to Shareholders

As a Business Development Company, Hercules Capital is statutorily limited in its borrowing capacity relative to total assets and Net Asset Value. The lawsuit asserts that accurate industry classification is not merely a labeling exercise. It is material to how investors evaluate portfolio diversification, concentration risk, and the reliability of reported NAV. As alleged, if software holdings were properly categorized and marked to reflect sector distress rather than carried at par, the Company's reported NAV figures and portfolio health metrics would have looked materially different.

Speak with an attorney about recovering damages  or call (212) 363-7500.

The action contends that management touted the Company's "continued credit discipline and strong credit performance" while these classification and valuation practices allegedly concealed a significant vulnerability. When Hunterbrook Media published its investigative report on February 27, 2026, the market reacted swiftly to the newly available information.

WHY LEVI & KORSINSKY -- Ranked in ISS Securities Class Action Services' Top 50 Report for seven consecutive years, Levi & Korsinsky, LLP is a nationally recognized leader in shareholder rights litigation. With a team of over 70 professionals, the firm has recovered hundreds of millions of dollars for investors.

CONTACT:
SueWallSt
Joseph E. Levi, Esq.
33 Whitehall Street, 27th Floor
New York, NY 10004
jlevi@SueWallSt.com
Tel: (888) SueWallSt
Fax: (212) 363-7171

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SOURCE SueWallSt.com