#USA #San Diego #Class Action #Ready Capital #Broadmark Realty

Investors File Class Action Lawsuit Against Broadmark Realty Capital Inc.

In a significant move, investors have initiated a class action lawsuit against Broadmark Realty Capital Inc. and Ready Capital Corporation, particularly focusing on the damages sustained post their merger. The legal proceedings underscore critical allegations against the companies, suggesting misleading statements in their communications.

Background of the Case

Robbins Geller Rudman & Dowd LLP represents investors who held common stocks with Broadmark Realty Capital (NYSE: BRMK) as of the record date for the merger finalized on May 31, 2023. The firm has set a deadline of July 28, 2025, for interested investors to apply for the role of lead plaintiff in this class action, known as Grant v. Broadmark Realty Capital, No. 25-cv-01013 (W.D. Wash.). The lawsuit alleges that the companies and specific executives made false statements and failed to disclose material financial troubles affecting borrowers in Ready Capital's portfolio, particularly tied to rising interest rates.

Allegations of Financial Mismanagement

The class action lays out several crucial allegations:
1. Misleading Proxy Statements: The proxy statements used to solicit shareholder support for the merger were claimed to contain false and misleading information, specifically concerning the financial condition of Ready Capital’s borrowers.
2. Financial Distress of Borrowers: A significant portion of the borrowers in Ready Capital's portfolio were purported to be in dire financial straits due to increased borrowing costs resulting from high interest rates.
3. Oversupply in Property Markets: Reports suggest there's an oversupply of multifamily properties in Ready Capital's active markets, limiting rent increases necessary to offset growing debt costs.
4. Flaws in Major Development Projects: A high-profile project, involving the Ritz-Carlton in Portland, was reportedly plagued with setbacks, including budget overruns and construction delays. The legal filings emphasize that these issues were inadequately disclosed to investors.

Implications for Investors

These revelations have negative implications for the valuation of Ready Capital stock, which has consistently traded below the merger price. Investors involved have the opportunity to assert their rights by taking on the role of lead plaintiff, a position that involves guiding the litigation on behalf of the class members.

The Legal Process Ahead

Under the Private Securities Litigation Reform Act of 1995, any investor who held Broadmark common stock as of the merger's record date can apply to serve as the lead plaintiff. This lead position is typically reserved for those with the most significant financial interest in the outcome. The lead plaintiff will have the power to appoint their choice of legal representation for the lawsuit and will act as a representative for the entire class.

About Robbins Geller

Robbins Geller Rudman & Dowd LLP is a leading law firm renowned for its commitment to investor protection, particularly in securities fraud cases. Having recovered extensive monetary relief for investors in the past, the firm is well-equipped to navigate the complexities of securities litigation.

Investors who feel they have suffered substantial losses as a result of the merger are encouraged to engage with Robbins Geller for further guidance. For more information about the Broadmark class action lawsuit, they can follow the relevant links or contact the firm directly at 800/449-4900.

Conclusion

This class action represents a critical moment for investors affected by the merger between Broadmark Realty Capital and Ready Capital, illuminating the necessity for transparency and accountability in financial reporting. As the deadline approaches, shareholders must act swiftly to protect their rights in the ongoing litigation.