New York appellate court affirms dismissal of securities case against dLocal

The Supreme Court of the State of New York, Appellate Division, First Department has unanimously upheld the dismissal of a securities class action lawsuit against dLocal Ltd., affirming a lower court’s decision to throw out claims tied to the company’s 2021 initial public offering, when it listed on the NASDAQ under the ticker DLO, including allegations related to its take rate disclosures.

The lawsuit, filed in New York County (the trial-level court for Manhattan), alleged that dLocal's registration statement and prospectus contained materially misleading statements and omissions regarding trends in the company's "take rate"—a key metric reflecting the fees it earns on processed transactions. Plaintiffs argued that declining take rates were not adequately disclosed to investors.

However, the appellate court rejected those claims, finding that plaintiffs failed to identify a known material trend that should have been disclosed. The court pointed to the company's consistent growth in total payment volume, revenue and gross profit during the pre-IPO period as undermining the allegations.

Validation of dLocal's disclosures

The decision affirms an earlier ruling by the New York County Supreme Court, which had granted the defendants' motion to dismiss the complaint in its entirety.

In a statement, Pedro Arnt, chief executive officer of dLocal, said the ruling validates the company's disclosures and business performance. "We are pleased that the Appellate Division unanimously affirmed the complete dismissal of this case in a decision that recognizes the strength of the Company's disclosures … and the merits of our position," Arnt said.

The case is one of several legal and regulatory challenges dLocal has faced in recent years. The company, which provides payment infrastructure connecting global merchants to emerging markets across Latin America, Africa, Asia and the Middle East, has drawn scrutiny from short sellers and investors over its financial reporting and growth metrics since going public.

In late 2022, short-selling firm Muddy Waters published a report questioning aspects of dLocal's disclosures, including its take rate and customer concentration, which contributed to volatility in the company's stock. While dLocal disputed those claims, the scrutiny prompted increased attention from investors and regulators and helped fuel litigation such as the New York case.

Broader market concerns not addressed

The appellate ruling does not address broader market concerns but does close the door on this particular line of legal challenge tied to the company's IPO disclosures.

dLocal said it remains focused on executing its strategy of providing a unified platform—often referred to as "One dLocal"—that enables global enterprises to accept payments, send payouts and manage funds across multiple emerging markets through a single integration.

Payments industry observers noted that the outcome underscores the challenges plaintiffs face in securities litigation tied to forward-looking business metrics, particularly when companies can demonstrate sustained growth alongside disputed trends.

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