#United States #San Diego #Class Action #Ready Capital #Broadmark Realty Capital

Investors File Class Action Lawsuit Against Broadmark Realty Capital Inc.

In a significant legal development, Robbins Geller Rudman & Dowd LLP has filed a class action lawsuit on behalf of investors against Broadmark Realty Capital Inc. (NYSE: BRMK) and Ready Capital Corporation (NYSE: RC), among others. This lawsuit highlights serious allegations related to the merger between Broadmark and Ready Capital, which was completed in early June 2023. The plaintiffs, who held shares of Broadmark at the time of the merger, assert that misleading statements in the proxy statement used to secure shareholder approval have caused them substantial financial losses.

Background of the Merger

On May 30, 2023, shareholders of Broadmark approved the merger with Ready Capital, which was finalized the following day. Both firms operate as real estate investment trusts (REITs), focusing on real estate-related financing and investments. However, the lawsuit claims that the merger was shrouded in financial distress warnings that were inadequately disclosed to investors.

Allegations Against the Companies

The lawsuit outlines multiple allegations, asserting that the proxy statement contained false and misleading information. Key points of contention include:

• - Financial Distress of Borrowers: Investors claim that a substantial portion of borrowers within Ready Capital’s portfolio were facing financial strain due to rising interest rates, which had escalated their borrowing costs significantly.

• - Oversupply of Multifamily Properties: The plaintiffs argue that the merger failed to disclose a severe oversupply of multifamily properties in the markets where Ready Capital operates, restricting their borrowers' ability to raise rents to meet increasing debt obligations.

• - Significant Development Issues: A major project included in the merger, notably the acquisition of a Ritz-Carlton property in Portland, Oregon, reportedly faced various setbacks such as funding shortfalls and construction delays that were not revealed at the time of the merger.

• - Understated Credit Loss Projections: As a result of the above issues, investors believe that Ready Capital's projections regarding earnings and dividend payouts were materially overstated, misleading investors about the financial health of the merged entity.

Call for Lead Plaintiff

Robbins Geller has set a deadline of July 28, 2025, for investors who suffered substantial losses to come forward and seek the designation of lead plaintiff in the lawsuit. By serving as lead plaintiff, an investor will guide the litigation on behalf of the entire class, making decisions that will affect all similarly situated shareholders.

Investors interested in joining the class action are encouraged to reach out through the firm’s website or directly contact attorneys involved in the case. It’s essential for affected shareholders to understand that participation in the lawsuit does not require serving as the lead plaintiff.

The Significance of the Case

This lawsuit adds a significant layer of scrutiny on the merger process of Broadmark and Ready Capital and raises questions about transparency in corporate communications during significant financial shifts. Class action suits like this serve to hold executives accountable and advocate for the rights of shareholders.Afflicted investors are reminded of the importance of engaging in litigation, particularly when they perceive that fraud or misrepresentation has occurred during major corporate transactions.

With Robbins Geller's strong track record in pursuing securities fraud cases, the outcome of this lawsuit could set precedent regarding disclosures in similar mergers and acquisitions in the future.

Conclusion

As this legal battle unfolds, investors closely monitoring the developments of the Broadmark and Ready Capital merger can glean insights into the regulatory landscape for corporate mergers and the vital need for accurate communication. The engagement of shareholders in the lawsuit could potentially pave the way for greater accountability in capital markets. For further updates, investors and interested parties are encouraged to follow the ongoing legal proceedings.