DLocal calls short seller allegations ‘without merit’

DLocal announced a response to allegations made in a report by short seller Muddy Waters Capital, dated November 16, 2022, as well as a share buyback program and proposed share purchases by key shareholders and senior management team. The company said, "We value corporate governance and transparency, and in that spirit have engaged in a thorough, fully resourced set of processes to review the short seller’s allegations. Our Board of Directors requested that management with the assistance of the Company’s professional advisors, including a global investigations and advisory services firm, conduct an internal review of the allegations made by the Report. In addition, our Audit Committee, consisting solely of independent directors, is conducting a review of the allegations in the Report with the assistance of independent counsel and an independent global expert services and forensic accounting advisory firm. That review is substantially complete. We will not engage in a tit-for-tat rebuttal of the numerous factual errors or inflammatory, misleading statements set forth in the Report, which collectively demonstrate a fundamental lack of understanding of our financial statements and business. However, based on the two separate reviews, we do wish to set the record straight with respect to the following: Client funds. We maintain separate bank accounts for merchant cash and our own cash. We have not used merchants’ cash to make loans to our senior leadership or to pay dividends to our shareholders. Additionally, the reviews verified that the amounts recorded on the Company’s balance sheet as own funds or merchant funds, respectively, were consistent with the balances reflected on bank statements of dLocal and its subsidiaries as of September 30, 2022, with no material exception. Take Rates/FX Fees. The Report draws comparisons between dLocal and other companies, which are inaccurate and unsubstantiated. PrimeiroPay acquisition. The PrimeiroPay asset acquisition was an arm’s-length, stand-alone transaction. We engaged internationally recognized professional advisors in the transaction who conducted financial and legal due diligence. Pre-IPO loans to executives. The pre-IPO loans extended to Company executives to purchase Company shares were repaid prior to the IPO in order to comply with U.S. legal requirements and not, as suggested in the Report, "to avoid the negative optics of making a large loan to its senior management pre-IPO." The acquisition of shares by our CEO and President and related loans were entirely independent of the PrimeiroPay transaction, and the loans were repaid prior to our IPO. Comparisons of Total Payment Volume reporting. The Report makes specious allegations about our TPV reporting, claiming we have been inconsistent in TPV cohort reporting; however, the Company has disclosed applicable TPV cohort methodology, including a change in its methodology between its final F-1 filing and its 20-F filing. The Company’s total TPV for each relevant year is the same amount under both methodologies for reporting TPV by cohort. The Report makes inaccurate and misleading comparisons of the Company’s initial draft registration statement to a subsequent period annual report and earnings presentation. We describe the applicable methodology for TPV cohort reporting in each instance, as set forth in our filings with the SEC. Qualifications of the Independent Auditor. Price Waterhouse & Co. is the independent auditor of the Company. It was appointed as auditor by the Board of Directors as mandated by applicable laws and regulations, and consistent with independence rules. It works with other PwC member firms as necessary and appropriate under relevant applicable auditing standards."