FS KKR Capital Securities Fraud Lawsuit, Were You an FSK Investor Between May 2024 and February 2026? Stuart v. FS KKR Capital Corp., et al., No. 2:26-cv-02969

FS KKR Capital Corp. is facing a securities fraud class action lawsuit — Stuart v. FS KKR Capital Corp., et al., No. 2:26-cv-02969 — filed in the U.S. District Court for the Eastern District of Pennsylvania, alleging that FSK and its top executives made materially false and misleading statements about the health of the company’s loan portfolio, the effectiveness of its restructuring efforts, and the durability of its dividend — causing investors who bought FSK shares between May 8, 2024 and February 25, 2026 to suffer losses exceeding 23% when the truth emerged across two corrective disclosures. If you purchased FSK securities during that period and lost money, the lead plaintiff deadline is July 6, 2026.

FS KKR Capital Corp. Securities Fraud Lawsuit — Key Facts

Field	Detail
Defendant	FS KKR Capital Corp. (NYSE: FSK); Michael C. Forman, CEO & Chairman; Steven Lilly, CFO
Case Name & Number	Stuart v. FS KKR Capital Corp., et al., No. 2:26-cv-02969
Court	U.S. District Court, Eastern District of Pennsylvania
Class Period	May 8, 2024 – February 25, 2026
Who Is Affected	Investors who purchased or acquired FSK securities during the class period
Specific Laws Alleged	Sections 10(b) and 20(a) of the Securities Exchange Act of 1934; SEC Rule 10b-5
Alleged Misconduct	Overstated portfolio restructuring effectiveness; overstated portfolio valuations; overstated durability of quarterly distributions
Drop Event 1	August 7, 2025: –$1.66/share (–8.20%), closing $18.58
Drop Event 2	February 26, 2026: –$2.03/share (–15.24%), closing $11.29
Cumulative Decline	Exceeding 23% over the class period
Lead Plaintiff Deadline	July 6, 2026
Settlement Status	No settlement — active litigation
Lead Plaintiff	Calvin Stuart
Filing Firm	Glancy Prongay & Wolke LLP (additional firms also pursuing lead plaintiff)
Last Updated	May 28, 2026

Who Is FS KKR Capital Corp. and Why Are They Facing a Securities Fraud Lawsuit?

FS KKR Capital Corp. is a publicly traded business development company incorporated in Maryland with principal offices in Philadelphia, Pennsylvania. Its common stock trades on the New York Stock Exchange under the ticker symbol FSK. A business development company, or BDC, is a type of closed-end investment fund that specializes in lending money to mid-sized private companies — businesses that often cannot easily access traditional bank loans or public bond markets. FS KKR’s principal revenue comes from interest on those private loans, plus fees and dividends from the companies it finances.

That business model makes net asset value — the per-share value of everything FSK owns minus what it owes — the number investors watch most closely. When borrowers stop paying interest, those loans go on “non-accrual” status, dragging NAV down. 

The lawsuit alleges that for five consecutive quarters, FSK told investors its portfolio was getting healthier, its restructuring efforts were working, and its dividend was safe — then disclosed the opposite in two rapid-fire earnings releases that sent the stock into a cumulative decline of more than 23%. If you bought FSK shares between May 8, 2024 and February 25, 2026 while relying on those statements, this lawsuit may directly affect you.

What Did FS KKR Capital Tell FSK Investors Between May 2024 and February 2026?

The story FSK told shareholders, the filing says, was a reassuring one. For five straight quarters through the first quarter of 2025, the company allegedly described a steadily improving portfolio credit profile, said legacy non-accrual issues were being cleaned up through restructuring, and pointed to durable quarterly distributions.

The complaint quotes or paraphrases management as saying that the company made “significant progress restructuring certain non-accruing investments” and that the “long-term earnings power of FSK continues to be healthy.” It also quotes Michael C. Forman saying the company had “confidence in our ability to continue to reward shareholders with attractive distributions.”

In August 2024, Forman characterized the second quarter as “another solid quarter,” citing reductions in non-accrual investments and reaffirming a minimum distribution target of $2.90 per share for 2024. In February 2025, Forman described results as reflecting “continued strong performance,” citing portfolio stability and a well-laddered capital structure. In May 2025, he stated the company’s spillover income strategy supported the “continued stability” of its base and supplemental quarterly distributions. In November 2025, Forman announced a 2026 distribution strategy the company believed would yield approximately 10% on NAV, consistent with long-term BDC industry norms.

The lawsuit alleges this five-quarter reassurance campaign obscured a deteriorating reality that was already visible inside the portfolio — and that when the company could no longer contain it, investors paid the price in two sharp drops.

Understanding how securities fraud class actions work under the Exchange Act can help you assess whether your losses during this period may be recoverable.

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The Two FS KKR Capital Disclosures That Sent FSK Stock Lower — August 7, 2025 and February 26, 2026

Drop Event 1 — August 6, 2025 Q2 Earnings Release

The narrative of alleged misrepresentation began to unravel for FS KKR Capital on August 6, 2025, when the company reported its second-quarter earnings. FSK revealed that its Net Asset Value per share had dropped by 6.2% to $21.93. Simultaneously, the fair value of its investments declined by $474 million, and non-accruals — loans on which interest payments are no longer being recognized — climbed to 3.0% at fair value and 5.3% at amortized cost. This was a notable increase from the prior quarter’s 2.1% and 3.5%, respectively.

Management attributed these issues to “company specific issues” at four portfolio companies: Production Resource Group, 48forty, Kellermeyer Bergensons Services, and Worldwise. The market reacted swiftly and negatively to this news, with FSK shares sliding 8.20% the very next day, closing at $18.58 per share on August 7, 2025.

The lawsuit alleges that framing these as isolated, company-specific problems — while presenting the broader portfolio as stable — continued to conceal how deep the deterioration actually ran.

Drop Event 2 — February 25, 2026 Q4/Full Year 2025 Results and Dividend Cut

The steeper drop came on February 25, 2026. Fourth-quarter and full-year results showed NAV down again to $20.89, another $406 million drop in fair value, and non-accruals rising to 3.4% at fair value and 5.5% at amortized cost. The board cut the quarterly payout from $0.70 to $0.48 per share.

On the earnings call, Chief Investment Officer Daniel Pietrzak said recent underperformance reflected problems in additional names — including Medallia and Cubic Corp — that the four previously flagged companies accounted for only about 50% of net realized and unrealized losses, and that FSK’s non-accrual rate was running above the long-term BDC industry average cost basis rate of approximately 3.8%.

This news caused the price of FS KKR Capital stock to decline $2.03 per share, or 15.24%, from $13.32 per share on February 25, 2026, to $11.29 per share on February 26, 2026.

That single-day 15.24% drop — combined with the 8.20% drop in August — produced cumulative losses exceeding 23% for investors who held throughout the class period. The dividend cut from $0.70 to $0.48 per share represented a reduction of more than 31%, directly contradicting months of management assurances about distribution stability that income-focused investors had relied upon.

Are You Part of the FS KKR Capital FSK Securities Fraud Class Action?

If you bought or held FSK shares during the class period and lost money, here is exactly how to know whether this lawsuit covers you.

You likely qualify if:

• You purchased or acquired FS KKR Capital Corp. (NYSE: FSK) securities at any point between May 8, 2024 and February 25, 2026, inclusive
• You suffered a financial loss when the stock declined on August 7, 2025 or February 26, 2026, or both
• You held shares through either or both drop dates as a U.S. investor or foreign investor trading on a U.S. exchange
• You are an individual investor, pension fund, institutional investor, or retirement account that held FSK during the class period

You do NOT qualify if:

• You purchased all your FSK shares after February 25, 2026 (outside the class period)
• You are a named defendant or immediate family member of the CEO, CFO, or other individual defendants
• You did not suffer a net loss on your FSK investment during the class period

FSK Investors Outside Pennsylvania — Are You Still Covered?

Yes. This is a federal securities case, and the class covers FSK investors nationwide regardless of which state you live in. You do not need to be in Pennsylvania or even in the United States to be a class member, so long as you purchased FSK securities on a U.S. exchange during the class period.

If you are unsure whether you qualify for the FS KKR Capital securities fraud lawsuit, a free consultation with a securities fraud attorney can help you assess your losses and eligibility before the July 6, 2026 lead plaintiff deadline.

What Are FSK Investors Asking the Court to Award in the 2026 Securities Fraud Lawsuit?

The complaint — filed on behalf of lead plaintiff Calvin Stuart — seeks compensatory damages for investors who purchased FSK securities at prices alleged to have been artificially inflated by the company’s misrepresentations. Under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, investors can seek to recover the losses caused by the alleged fraud: the difference between what they paid for shares and what those shares were worth once the truth was revealed.

No specific dollar amount appears in the complaint at this stage. The actual recovery — if the lawsuit is successful — will depend on the number of class members, the volume of shares purchased at inflated prices, the strength of the evidence, and what the parties negotiate or what the court awards after trial. No money is available yet. No claim form exists.

What Could FSK Investors Receive If the Securities Fraud Case Settles?

It is impossible to predict recovery amounts at this stage. BDC securities fraud cases vary widely in outcome. What is known is that the alleged artificial inflation ran across a class period of nearly two years, and that the two corrective disclosures produced cumulative price declines exceeding 23% — meaning the potential damages pool is substantial. Investors with larger share positions during the class period typically have larger potential recoveries. Consulting a securities fraud attorney is the most reliable way to estimate your specific situation.

What Should FSK Investors Do Right Now?

1. You do not need to do anything immediately to be part of the class. Most investors are automatically included in the class simply by having purchased FSK shares during the class period. You do not need to file a claim form or hire a lawyer to be in the class.
   
2. Gather and preserve your trading records. Pull your brokerage statements, trade confirmations, and account history for FSK shares purchased between May 8, 2024 and February 25, 2026. Document every purchase date, number of shares, and price paid. These records determine both your eligibility and the size of any potential recovery.
   
3. Calculate your losses. Subtract what you received (or the current value) from what you paid for FSK shares during the class period. The larger your documented loss, the stronger your case for lead plaintiff consideration.
   
4. Consider the lead plaintiff role — deadline July 6, 2026. The lead plaintiff is the class member with the largest financial interest who is appointed by the court to represent all class members. The lead plaintiff selects the law firm that represents the class. You do not have to be lead plaintiff to share in any recovery, but if you have substantial losses, the July 6, 2026 deadline to file a motion with the court is hard — there are no extensions. Contact a securities fraud attorney before that date if you are interested.
   
5. Monitor the docket. The case is pending in the U.S. District Court for the Eastern District of Pennsylvania as Stuart v. FS KKR Capital Corp., et al., No. 2:26-cv-02969. Public filings are available on PACER.
   
6. Consider an individual claim. If your losses are large enough that a class recovery would be inadequate, or if you have unique circumstances, speak with a securities fraud attorney about whether an individual opt-out suit makes more sense for you.

FS KKR Capital (FSK) Securities Fraud Lawsuit Timeline

Milestone	Date
Class period begins	May 8, 2024
Q2 2024: Forman calls it “another solid quarter,” reaffirms $2.90 distribution target	August 2024
Feb 2025: Management cites “continued strong performance” and portfolio stability	February 2025
May 2025: Spillover income strategy cited as supporting distribution stability	May 2025
Nov 2025: Company announces 2026 distribution strategy targeting ~10% yield on NAV	November 2025
Drop Event 1: Q2 2025 earnings — NAV falls to $21.93 (–6.2%); investments –$474M; non-accruals rise to 3.0%/5.3%; 4 problem companies named	August 6, 2025
FSK stock falls –8.20%, closes at $18.58	August 7, 2025
Class period ends	February 25, 2026
Drop Event 2: Q4/FY 2025 results — NAV falls to $20.89 (–5%); investments –$406M; non-accruals rise to 3.4%/5.5%; Medallia, Cubic Corp disclosed; dividend cut $0.70 → $0.48	February 25, 2026
FSK stock falls –15.24%, closes at $11.29	February 26, 2026
Lawsuit filed; securities fraud investigation announced by multiple firms	March–May 2026
Lead Plaintiff Deadline	July 6, 2026
Next scheduled hearing	TBD — early stage litigation
Expected resolution	TBD — securities class actions typically resolve 2–4 years after filing

FS KKR Capital Securities Fraud Lawsuit — Frequently Asked Questions, No. 2:26-cv-02969

1. Is there a class action lawsuit against FS KKR Capital Corp. for securities fraud right now?

Yes. A securities class action lawsuit has been filed against FS KKR Capital Corp. (NYSE: FSK), its Chief Executive Officer Michael C. Forman, and its Chief Financial Officer Steven Lilly in the United States District Court for the Eastern District of Pennsylvania, captioned Stuart v. FS KKR Capital Corp., et al., No. 2:26-cv-02969. The defendants have not yet filed a response and no ruling has been made. All allegations remain unproven.

2. Do I need to do anything right now to be included in the FS KKR Capital securities fraud class action?

No immediate action is required to remain a class member. If you purchased FSK shares between May 8, 2024 and February 25, 2026, you are likely already included. The only time-sensitive step is the July 6, 2026 deadline to file a lead plaintiff motion — and that applies only to investors who want to lead the case. You can share in any future recovery without being lead plaintiff.

3. When will the FS KKR Capital securities fraud case settle?

It is far too early to predict. The case was filed in 2026 and is in its earliest stages. Defendants have not yet responded to the complaint. Securities class actions of this type typically take two to four years to resolve through negotiation, trial, or dismissal. No settlement talks have been publicly reported.

4. Can I file my own individual lawsuit against FS KKR Capital for securities fraud instead of joining the class?

Yes, but it is a significant decision. Individual securities fraud suits require you to bear your own litigation costs, prove reliance individually, and opt out of the class before any opt-out deadline is set by the court. For most retail investors, the class action provides a simpler path. For investors with very large, well-documented losses, an individual case may yield a larger recovery. A securities fraud attorney can help you evaluate which approach fits your situation.

5. How will I find out if the FS KKR Capital lawsuit settles?

The court will issue formal class notice if and when a settlement is proposed and receives preliminary approval. You can also monitor the PACER docket for Stuart v. FS KKR Capital Corp., No. 2:26-cv-02969 in the Eastern District of Pennsylvania. If you submitted your information to a law firm, they will notify you directly of material developments.

6. What does “lead plaintiff” mean and why does the July 6, 2026 deadline matter?

The lead plaintiff is the class member the court appoints to represent all investors. They have the most direct control over the litigation — including the choice of law firm and the evaluation of any settlement. The Private Securities Litigation Reform Act of 1995 requires that lead plaintiff motions be filed within 60 days of the first published notice of the lawsuit. That deadline for this case is July 6, 2026, and it is hard — courts do not grant extensions. Investors with the largest documented losses have priority for appointment.

7. What specific laws does FS KKR Capital Corp. allegedly violate?

The complaint asserts claims under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. Section 10(b) and Rule 10b-5 prohibit fraudulent or misleading statements in connection with the purchase or sale of securities. Section 20(a) creates “control person” liability — it holds senior executives like the CEO and CFO responsible for their company’s securities law violations when they directed, participated in, or had the power to control the conduct that caused the harm.

8. How much could FS KKR Capital (FSK) investors recover from the 2026 securities fraud lawsuit?

No money is available yet and no claim form exists. Any recovery depends on the strength of the evidence, the number of class members, the total shares traded at allegedly inflated prices during the class period, and what the parties ultimately negotiate or a court awards. FSK shares suffered cumulative declines exceeding 23% across the two corrective disclosure dates, suggesting a potentially large damages pool — but that is not a guarantee of any specific recovery per investor. Consult a securities fraud attorney to understand what your individual losses might yield.

Sources Used in This FS KKR Capital Securities Fraud Article

• SEC EDGAR — FS KKR Capital Corp. Form 8-K (Q4/FY 2025 results), filed February 25, 2026: https://www.sec.gov/Archives/edgar/data/0001422183/000110465926019719/tm267104d1_ex99-1.htm
• SEC EDGAR — FS KKR Capital Corp. Form 40-33 (derivative complaint referencing securities class action), 2026: https://www.sec.gov/Archives/edgar/data/0001422183/000110465926061261/tm2614603d1_4033.pdf
• InvestmentNews — “Investors sue FS KKR Capital over private credit, dividend disclosures”: https://www.investmentnews.com/regulation-legal-compliance/investors-sue-fs-kkr-capital-over-private-credit-dividend-disclosures/266452

Prepared by the AllAboutLawyer.com Editorial Team and reviewed for factual accuracy against FS KKR Capital Corp.’s SEC-filed 8-K (February 25, 2026) and InvestmentNews’ primary reporting on the complaint on May 28, 2026. Last Updated: May 28, 2026.

This article is for informational purposes only and does not constitute legal advice. All allegations in Stuart v. FS KKR Capital Corp. remain unproven in a court of law. Laws vary by state and individual circumstances differ. For advice about your specific investment losses, consult a qualified securities fraud attorney.