Vadim Fainberg filed the derivative complaint in the Northern District of California against Hercules Capital directors and officers, including CEO Scott Bluestein and CFO Seth Meyer. The lawsuit stems from a February 27, 2026 Hunterbrook Media report that alleged the company's due diligence process consisted of copying Google Ventures' investments rather than conducting thorough analysis.
According the complaint, a former Hercules analyst told Hunterbrook Media that the deal sourcing process involved going on Google Ventures' website and copying their investments. The report also described a finance team with few checks in place and a valuation team of just four people responsible for dozens of companies.
The lawsuit alleges that from May 1, 2025 through February 27, 2026, defendants made false statements about the company's due diligence protocols for deal sourcing, loan origination, and investment valuation. Hercules Capital, which provides secured senior loans to technology and life sciences companies, had previously stated that prospective portfolio companies were "subject to completion of our due diligence and final investment committee approval process."
Hercules Capital's stock price fell $1.22 per share, or approximately 7.9%, on the day the Hunterbrook Media report was published, closing at $14.21 per share on February 27, 2026.
The complaint also alleges that Bluestein and Meyer made insider stock sales totaling approximately $2.7 million during the relevant period before the alleged scheme was exposed. Bluestein sold 111,619 shares for over $2 million in proceeds, according to the filing.