Partner Reed Kathrein Investigating Whether Management Misrepresented Provision Trends and Lending Risk
SAN FRANCISCO, Dec. 15, 2025 /PRNewswire/ — National shareholder rights law firm Hagens Berman has launched an investigation into potential securities law violations by Klarna Group plc (NYSE: KLAR) following the company’s recent Q3 2025 financial results. The disappointing results revealed a staggering increase in the provision for credit losses. The company has seen a decline of approximately 23.6% from its initial public offering (IPO) price of $40.00 per share on September 9, 2025.
The investigation focuses on whether Klarna misled investors about the risks attendant to its aggressive push into the Fair Financing offering, which drove the massive provision increase and is potentially at odds with the company’s prior assurances regarding its lending risk metrics in the Offering Documents.
“A core issue in the IPO setting is transparency with investors. When a company’s provision for credit losses spikes 102% year-over-year, it calls into question whether that risk had already materialized by the time of the IPO,” said Reed Kathrein, the Hagens Berman partner leading the investigation. “We are specifically focused on the disclosures surrounding the 139% growth in the Fair Financing portfolio and whether management adequately warned investors that this push would negate prior low provision metrics. The firm urges investors in Klarna who suffered significant losses to contact the firm now to discuss their rights.“
Legal Analysis: Provision for Credit Losses Disclosure Gap
Hagens Berman’s investigation focuses on whether Klarna failed to properly disclose the significant, adverse impact that its Fair Financing growth would have on its provision for credit losses, rendering prior statements about its low risk profile misleading.
|
Financial Metric / Event |
Disclosure & Specific Figure |
Legal Focus |
|
Q3 2025 Provision |
Provision for Credit Losses increased by 102% year-over-year. |
Whether the Offering Documents misled investors about expected provision trends and lending risk. |
|
Lending Risk Profile |
Provision as a percentage of GMV rose to 0.72% (38% higher than the prior 12-month period). |
Whether the Offering Documents obscured credit loss risk attached to Gross Merchandise Volume (GMV) growth. |
|
Causation |
The increases were “driven by the upfront provisions” required to book the 139% growth in the Fair Financing portfolio. |
Whether the Offering Documents failed to properly disclose the direct, adverse impact of aggressive Fair Financing expansion on company financial health. |
Next Steps: Contact Partner Reed Kathrein Today
If you invested in Klarna (KLAR) and suffered significant losses, you may have legal options.
Mr. Kathrein and the firm’s investor fraud team are actively advising investors who suffered losses following the November 18, 2025, disclosure of the provision increases.
TO SUBMIT YOUR KLAR LOSSES NOW, PLEASE USE THE SECURE FORM BELOW:
- Submit Your KLAR Losses Now
- Contact: Reed Kathrein at 844-916-0895 or email KLAR@hbsslaw.com
- Visit: https://www.hbsslaw.com/cases/klarna-group-plc-klar-investigation
Whistleblowers: Persons with non-public information regarding Klarna should consider their options to help in the investigation or take advantage of the SEC Whistleblower program. Under the new program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, call Reed Kathrein at 844-916-0895 or email KLAR@hbsslaw.com.
About Hagens Berman
Hagens Berman is a global plaintiffs’ rights complex litigation firm focusing on corporate accountability. The firm is home to a robust practice and represents investors as well as whistleblowers, workers, consumers and others in cases achieving real results for those harmed by corporate negligence and other wrongdoings. Hagens Berman’s team has secured more than $2.9 billion in this area of law. More about the firm and its successes can be found at hbsslaw.com. Follow the firm for updates and news at @ClassActionLaw.
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SOURCE Hagens Berman Sobol Shapiro LLP
