Introduction to the Broadmark Class Action Lawsuit
The Broadmark class action lawsuit seeks to represent holders of Broadmark Realty Capital Inc. (NYSE: BRMK) common stock as of the record date of the May 2023 merger between Broadmark and Ready Capital Corporation (NYSE: RC) (the “Merger”). Captioned Grant v. Broadmark Realty Capital, No. 25-cv-01013 (W.D. Wash.), the Broadmark class action lawsuit charges Broadmark, Ready Capital, certain of Broadmark’s and Ready Capital’s top executives and directors, and Ready Capital’s external asset manager with violations of the Securities Exchange Act of 1934.
If you suffered substantial losses and wish to serve as lead plaintiff of the Broadmark class action lawsuit or just have general questions about you rights as a shareholder, please contact attorney Timothy L. Miles of the Law Offices of Timothy L. Miles, at no cost, by calling 855/846-6529 or via e-mail at tmiles@timmileslaw.com.
Lead plaintiff motions for the Broadmark class action lawsuit must be filed with the court no later than July 28, 2025..
Background of Broadmark Realty Capital Inc.
Founded in 2010, Broadmark Realty Capital Inc. offers short-term, first deed of trust loans secured by real estate to fund the acquisition, renovation, rehabilitation or development of residential or commercial properties.
Allegations in the Broadmark Class Action Lawsuit
Broadmark and Ready Capital are real estate investments trusts. On May 30, 2023, Broadmark shareholders voted to approve the merger of Broadmark and Ready Capital, which closed the next day.
The Broadmark class action lawsuit alleges that the proxy statement used to solicit the support of Broadmark shareholders for the Merger contained false and/or misleading statements and/or failed to disclose that:
(i) a material portion of borrowers within Ready Capital’s originated portfolio were experiencing significant financial distress due to high interest rates that had increased their borrowing costs;
(ii) an oversupply of multifamily properties in Ready Capital’s markets of operation had severely limited the ability of Ready Capital borrowers to raise their rents by the amounts necessary to cover their growing debt costs;
(iii) a major development project acquired in Ready Capital’s acquisition of Mosaic Real Estate Credit, LLC, Mosaic Real Estate Credit TE, LLC, and MREC International Incentive Split, LP (a Ritz-Carlton located in Portland, Oregon), which accounted for approximately $500 million of Ready Capital’s acquired loan portfolio, had experienced catastrophic setbacks since its inception, including significant cost overruns, construction delays, and funding shortfalls;
(iv) as a result, Ready Capital’s Current Expected Credit Loss reserves and expected credit losses were materially understated; and (v) consequently, Ready Capital’s financial projections regarding Ready Capital’s Distributable Earnings per share, dividends per share, and book value per share had no basis in fact when made.
The price of Ready Capital stock has remained significantly below the Merger price as of the time the Broadmark class action lawsuit was filed.
Reasons Behind the Broadmark Class Action Lawsuit
The reasons behind the Broadmark Class Action Lawsuit are rooted in allegations of corporate misconduct and misrepresentation. These claims suggest that Broadmark Realty Capital Inc. may have engaged in activities or made statements that misled investors about the company’s financial health or prospects. Understanding these allegations is vital for assessing the potential outcomes of the lawsuit.
The lawsuit’s foundation lies in the assertion that investors relied on inaccurate or misleading information when making investment decisions. Such claims, if proven, can have significant legal and financial implications for the company and its stakeholders. Investors need to understand the basis of these allegations to evaluate the potential risks and rewards associated with the lawsuit.
By comprehending the reasons behind the lawsuit, you can better assess how it might affect your investments in Broadmark Realty Capital Inc. Whether the claims involve financial statements, business practices, or other corporate actions, understanding the lawsuit’s basis will help you make informed decisions about your involvement and potential next steps.
Who is Affected by the Broadmark Class Action Lawsuit?
The Broadmark Class Action Lawsuit lawsuit primarily affects investors who purchased shares during the period in which the alleged misconduct occurred. If you invested in Broadmark Realty Capital Inc. during this time, you could be part of the affected class and eligible for compensation if the lawsuit succeeds.
Identifying whether you are part of the affected group is crucial for understanding your rights and potential benefits. The lawsuit may involve a specific time frame and set of circumstances that define the class of investors who can participate. Knowing these details will help you determine your eligibility and take appropriate action.
In addition to investors, the lawsuit can also impact the company’s executives, board members, and other stakeholders. The outcome of the lawsuit could influence Broadmark’s reputation, financial stability, and future operations, affecting all parties associated with the company. Staying informed about the lawsuit’s progress is essential for anyone connected to Broadmark Holdings.
Potential Outcomes of the Broadmark Lawsuit
The potential outcomes of the Broadmark Lawsuit are varied and can significantly impact investors and the company. Possible outcomes include a settlement, a court ruling in favor of the plaintiffs, or a dismissal of the case. Each scenario presents different implications for investors and requires careful consideration.
A settlement could result in compensation for affected investors, allowing you to recover financial losses incurred due to the alleged misconduct. However, the terms of the settlement, including the amount and distribution of compensation, can vary. Understanding these terms is crucial for evaluating the benefits of a settlement.
If the court rules in favor of the plaintiffs, Broadmark may face financial penalties and be required to implement changes to its business practices. Conversely, a dismissal could mean that the claims were not substantiated, resulting in no compensation for investors. Regardless of the outcome, staying informed and prepared for any scenario is essential for safeguarding your investments.
Legal Support and Resources for Affected Investors
Legal support and resources are crucial for investors involved in the Broadmark class action lawsuit. Navigating the legal landscape requires expertise and guidance to ensure that your rights are protected and your interests are prioritized. Understanding the available resources can help you access the support you need during the lawsuit.
Working with a qualified attorney experienced in class action lawsuits can provide invaluable assistance. Legal professionals can help you understand the intricacies of the case, guide you through the registration process, and represent your interests in court. Their expertise can help you make informed decisions and maximize your potential benefits from the lawsuit.
In addition to legal representation, various resources are available to assist investors involved in the lawsuit. These resources may include informational websites, investor forums, and support groups that can provide updates, insights, and community support. Utilizing these resources can enhance your understanding of the lawsuit and help you connect with other affected investors.
The Lead Plaintiff Process in the Broadmark Class Action Lawsuit
The Private Securities Litigation Reform Act of 1995 allows investors who purchased Broadmark securities during the class period to seek appointment as lead plaintiff in the lawsuit. The lead plaintiff plays a crucial role in representing the interests of the entire class.
Criteria for Lead Plaintiff
To be appointed as lead plaintiff, an investor must meet specific criteria:
- Financial Interest: The investor must demonstrate that they have the largest financial stake in the outcome of the case.
- Typicality: The lead plaintiff’s claims must be typical of those of other class members.
- Adequacy: The lead plaintiff must be able to adequately represent the interests of the class.
Importance of the Lead Plaintiff
The lead plaintiff has the authority to select legal counsel and guide the direction of the lawsuit. This role is vital in ensuring that the interests of all affected investors are represented effectively.
Implications for Corporate Governance
The lawsuit underscores the importance of corporate governance and accountability. Companies must ensure that their communications with investors are accurate and transparent to maintain trust and avoid legal repercussions.
Settlement Possibilities
One possible outcome is a settlement between Broadmark and the plaintiffs. Settlements can provide a quicker resolution and may include financial compensation for affected investors. However, settlements often require the company to implement changes in its practices to prevent future issues.
Trial Proceedings
If the case does not settle, it may proceed to trial. A trial could result in a ruling that holds Broadmark accountable for its alleged actions, potentially leading to substantial financial penalties and changes in corporate governance.
Impact on Shareholder Value
Regardless of the outcome, the lawsuit is likely to impact Broadmark’s shareholder value. A negative ruling or settlement could lead to further declines in stock prices, while a favorable outcome for the company may help restore investor confidence.
Next Steps for Affected Investors
Investors who believe they have been adversely affected by Broadmark’s actions should consider the following steps:
- Gather Documentation: Collect all relevant documents, including purchase records and communications from the company.
- Consult Legal Counsel: Seek advice from an attorney experienced in securities law to evaluate potential claims.
- Stay Informed: Keep abreast of developments in the lawsuit and any announcements from Broadmark.
By taking proactive steps, investors can better navigate the complexities of the Broadmark Class Action Lawsuit and protect their interests in this evolving legal landscape.
