#United States #Robbins Geller #San Diego #Ready Capital #Broadmark Realty

Investors Unite in Class Action Against Broadmark Realty Capital and Ready Capital

In a significant legal move, investors in Broadmark Realty Capital Inc. (NYSE: BRMK) have initiated a class action lawsuit against the company and its recent merger partner, Ready Capital Corporation (NYSE: RC). This lawsuit, announced by the renowned law firm Robbins Geller Rudman & Dowd LLP, highlights serious allegations regarding misleading information presented during the merger between these two real estate investment trusts (REITs).

Background of the Merger

The merger between Broadmark and Ready Capital was finalized on May 31, 2023, following a shareholder vote on May 30. While this merger was anticipated to strengthen their market position, recent developments have raised alarm among investors. The lawsuit pertains to claims that the proxy statements circulated prior to the merger failed to disclose critical financial challenges facing Ready Capital, ultimately leading to significant investor losses.

Allegations of Misrepresentation

According to the allegations, several material facts were omitted from the merger discussions, including:
1. Financial Distress Among Borrowers: A significant number of borrowers within Ready Capital's portfolio were reportedly experiencing financial difficulties due to rising interest rates. This increased the borrowing costs, causing distress for those relying on these loans.
2. Oversupply of Properties: In addition to the financial stress, an oversupply of multifamily properties in the markets where Ready Capital operates has limited borrowers' ability to increase rents to cope with rising debt costs.
3. Setbacks in Major Projects: The lawsuit also points to severe setbacks in a major development project associated with the acquisition of Mosaic Real Estate Credit, impacting its financial viability. This project, a Ritz-Carlton in Portland, Oregon, faced significant cost overruns and funding shortfalls from its inception.
4. Understated Credit Loss Reserves: As a result of these issues, the lawsuit argues that Ready Capital’s Current Expected Credit Loss reserves were materially understated, leading to a distorted picture of the company's financial health.
5. Misleading Financial Projections: Finally, the allegations suggest that the financial projections related to earnings, dividends, and book value presented during the merger were fundamentally unfounded.

The cumulative effect of these misrepresentations is that the stock price of Ready Capital has dramatically lagged behind the merger price, exacerbating investor losses since the deal was completed. This indicates a worrying trend for investors who believed they were making a sound investment during the merger.

The Class Action Process

Investors who held Broadmark common stock as of the merger record date have a crucial opportunity to step forward as lead plaintiffs in this class action. The Private Securities Litigation Reform Act of 1995 allows them to take this leadership role, aimed at ensuring that their interests are well-represented. The lead plaintiff generally bears the greatest financial interest in the relief sought and is crucial in driving the case forward.

Robbins Geller, with its extensive experience in securities fraud litigation, is representing the plaintiffs, emphasizing that this case could potentially unlock significant recoveries for those affected by the alleged misbehavior of Broadmark and Ready Capital executives.

About Robbins Geller

Robbins Geller Rudman & Dowd LLP is widely regarded as one of the leading law firms for investors in securities fraud cases. Over the last few years, it has secured billions of dollars in recovery for plaintiffs in class action lawsuits, demonstrating its strong influence and capability in holding corporations accountable for financial misconduct. In 2024 alone, the firm managed to recover over $2.5 billion for investors, showcasing its strength in this challenging legal landscape.

Conclusion

With the deadline for interested investors to seek appointment as lead plaintiff set for July 28, 2025, this unfolding case presents a critical juncture. Investors who believe they have experienced significant losses from the merger between Broadmark and Ready Capital are encouraged to act swiftly and engage with the legal team at Robbins Geller for guidance. Taking action could pave the way for potential recovery and hold the responsible parties accountable for their actions.

For more information or to express interest in joining the lawsuit, investors can visit the Robbins Geller website or contact their offices directly. This marks an essential step for those impacted by what may become a landmark case in securities litigation.