Introduction to the Broadmark Class Action Lawsuit
The lawsuit challenges the merger’s proxy statement. Shareholders approved this merger on May 30, 2023, and the deal closed the next day. Ready Capital’s stock price has stayed substantially below the merger price since the completion.
The legal action targets multiple parties. Broadmark, Ready Capital, several top executives, directors, and Ready Capital’s external asset manager face charges of violating the Securities Exchange Act of 1934. Investors need to understand their rights and options quickly as the deadline approaches. The next sections will cover this case’s implications, who can join, and the benefits class members might receive.
Please see the various investor resources below for an additional wealth of information.
Broadmark faces class action over merger misstatements
Investors have filed a class action lawsuit against Broadmark Realty Capital Inc. The lawsuit claims the company made major misrepresentations in documents about its merger with Ready Capital. Their legal filing targets the proxy statement used to get shareholder support and claims it had several false and misleading statements that broke securities laws.
Allegations of misleading proxy statements
The Broadmark Class Action Lawsuit claims Broadmark, Ready Capital, their directors, top executives, and their external asset manager Waterfall Asset Management LLC broke Section 14(a) of the Securities Exchange Act. Court documents show these parties asked Broadmark’s shareholders to vote for the May 30, 2023 merger using materially misleading proxy materials. The investors say they approved the merger because they received inaccurate information that didn’t show the combined entity’s true financial picture.
Financial distress in Ready Capital’s portfolio
Ready Capital kept quiet about serious problems in its loan portfolio. Court filings show much of Ready Capital’s originated portfolio borrowers faced major financial stress. Rising interest rates pushed up their borrowing costs. On top of that, it turned out there were too many multifamily properties in Ready Capital’s markets. This made it hard for borrowers to raise rents enough to pay their growing debt. Ready Capital never told Broadmark’s shareholders about these factors before they voted on the merger.
Undisclosed risks in major development projects
The biggest problem was a major development project Ready Capital got through its Mosaic Real Estate Credit entities purchase. This Ritz-Carlton hotel project in Portland, Oregon made up approximately $500 million of Ready Capital’s acquired loan portfolio. The lawsuit points out the project faced:
- Catastrophic setbacks since inception
- Cost overruns way beyond original projections
- Construction delays affecting completion timelines
- Critical funding shortfalls threatening project viability
These hidden issues meant Ready Capital’s Current Expected Credit Loss reserves and expected credit losses were much lower than they should have been. The company’s financial projections about distributable earnings per share, dividends, and book value had no real support when shown to Broadmark’s shareholders. This explains why Ready Capital’s stock has stayed notably below the merger price since the deal closed.
Investors file Broadmark Class Action Lawsuit under securities fraud claims
Broadmark faces a securities class action lawsuit under the Securities Exchange Act of 1934. The lawsuit claims violations occurred during its merger with Ready Capital Corporation.
What is a Broadmark class action lawsuit?
Securities class actions help groups of investors who lost money from alleged securities law violations after buying or selling a company’s publicly traded securities during a specific timeframe. Broadmark’s case covers common stock holders from the record date of the May 2023 merger. These lawsuits let shareholders join forces to seek compensation instead of filing separate claims. The timeframe starts when a company makes false statements or hides important information, and ends when “corrective disclosures” reveal the truth.
How the Private Securities Litigation Reform Act applies
The Private Securities Litigation Reform Act (PSLRA) of 1995 created strict rules for securities fraud claims. Investors have until July 28, 2025 to apply as lead plaintiff in the Broadmark Lawsuit. The PSLRA wants institutional investors to serve as lead plaintiffs to balance power between shareholders and class action lawyers. Courts usually pick the applicant with the biggest financial stake who represents the class fairly. The lead plaintiff guides the lawsuit and chooses legal counsel. Other investors can still benefit from any recovery without becoming lead plaintiff.
Role of scienter and material misrepresentation
The Broadmark Lawsuit‘s success depends on proving scienter and material misrepresentation. Scienter means “a mental state embracing intent to deceive, manipulate, or defraud”. Courts accept both actual intent to defraud and recklessness as proof of scienter. Material misrepresentations are statements that “would have been viewed by the reasonable investor as having substantially altered the ‘total mix’ of information made available”. The Broadmark Class Action Lawsuit claims Ready Capital’s financial projections about distributable earnings, dividends, and book value lacked factual support when shown to shareholders. Notwithstanding that, the PSLRA requires plaintiffs to “state with particularity facts giving rise to a strong inference that the defendant acted with the required state of mind”.
Court sets July 28, 2025 deadline for lead plaintiff motions
The federal court handling the Broadmark Class Action Lawsuit has set July 28, 2025 as the final deadline for investors who want to be appointed as lead plaintiff. This key date comes 60 days after the first lawsuit notice was published.
Who can file as lead plaintiff?
ThePSLRA allows any investor who owned Broadmark common stock during the May 2023 merger with Ready Capital Corporation to apply for lead plaintiff status. Candidates must meet three basic requirements:
- Securities Acquisition: Must have owned Broadmark shares during the relevant period
- Financial Losses: Must have lost money due to the alleged violations
- Typicality and Adequacy: Must have claims that represent the class and show they can represent class interests effectively
Investors from any country can apply if they meet these requirements. Courts have consistently upheld the rights of non-U.S. investors in securities class actions.
How financial interest is calculated
Courts look at which applicant has the “largest financial interest” when choosing lead plaintiffs. While the PSLRA doesn’t specify exact calculation methods, judges look at:
- Total class period purchases
- Net class period purchases
- Net class period expenditures
- Losses calculated using last-in-first-out (LIFO) or first-in-first-out (FIFO) methods
Investor groups can combine their losses in joint petitions. Courts review these case-by-case based on group size and how they plan to work together.
What responsibilities does a lead plaintiff have?
Lead plaintiffs take on important duties throughout the legal process. They must:
- Select, monitor, and oversee lead counsel
- Review court filings for the class
- Discuss strategies with counsel
- Give deposition testimony when needed
- Attend hearings and possible trial proceedings
- Take part in mediation efforts
- Help make settlement decisions
The lead plaintiff must always act in every class member’s best interest during the Broadmark Class Action Lawsuit. The role requires dedication but gives more control over how the case moves forward.
Investors weigh eligibility and next steps
The Broadmark Class Action Lawsuit deadline is coming up this July, and class members need to review their options. Class actions provide different advantages than individual lawsuits. Investors should know the specific eligibility requirements before they make their decision.
Can you join if you sold your stock?
The Broadmark Class Action Lawsuit affects investors who bought shares during the alleged misconduct period. Former Broadmark investors who got Ready Capital stock after the merger might still qualify to get monetary relief. Your eligibility depends on whether you owned Broadmark common stock when the May 2023 merger happened. You might also qualify as a class member if you sold your shares after buying them during the relevant period. You should gather all your documents to determine your situation. These documents include your purchase records and any company communications.
What are the benefits of joining the class action?
The Broadmark Lawsuit gives you several strategic advantages:
- Power in numbers – Collective action against large corporations creates much more leverage than individual lawsuits
- Cost efficiency – Class members split legal expenses and attorney fees, which need court approval for any settlement or judgment
- Minimal personal involvement – Class members rarely need to participate actively as the lawsuit moves forward. The lead plaintiff handles most duties
- Corporate accountability – Big companies often settle to avoid reputation damage from class actions
Class actions help investors who lost modest amounts that wouldn’t make sense to hire private counsel. To cite an instance, if you lost $10,000 on Broadmark investments due to alleged fraud, a class action would cost less than hiring your own lawyer.
How to contact legal counsel to review
You can reach out to several firms that handle the Broadmark Class Action Lawsuit for free case evaluations. Attorney Timothy L. Miles also offers free consultations at 855/846-6529 or through email at tmiles@timmileslaw.com.
Securities cases’ statutes of limitations can run out in two years or less, so quick action is vital. Legal experts will help check your eligibility, walk you through registration, and protect your interests during the proceedings.
Conclusion
The Broadmark Realty Capital class action lawsuit is a most important case for investors affected by the May 2023 merger with Ready Capital Corporation. Shareholders who held stock during this period must act by July 28, 2025, to seek appointment as lead plaintiff. The case reveals a troubling pattern of misleading proxy statements, hidden portfolio problems, and project risks that point to possible securities violations.
The Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act are the foundations of this case. These laws set up the framework for claims and class representation procedures. Stock ownership during the specific period determines if you qualify as a class member.
Affected investors should take time to assess their options. Class actions give better advantages than filing individual lawsuits, especially when you have to take on large corporations. Former Broadmark shareholders who got Ready Capital stock after the merger might still qualify for relief even if they sold their original shares.
Time plays a crucial role here. The deadline is getting closer, and investors need to act fast to get the best possible recovery. Anyone who might have lost money due to alleged misleading merger statements should talk to experienced securities litigation lawyers. This lawsuit could end up providing substantial compensation to investors who lost money because of what plaintiffs say were misleading merger documents.
Key Takeaways
Broadmark investors have until July 28, 2025 to seek lead plaintiff status in a class action lawsuit alleging securities fraud during the company’s merger with Ready Capital Corporation.
• Critical Deadline Approaching: Investors who held Broadmark stock during the May 2023 merger have until July 28, 2025 to apply for lead plaintiff status in the securities fraud lawsuit.
• Merger Based on Alleged Misrepresentations: The lawsuit claims Broadmark’s proxy statement contained false information about Ready Capital’s financial distress, including a troubled $500 million Portland hotel project.
• Broad Eligibility for Class Members: Former Broadmark shareholders who received Ready Capital stock after the merger may still qualify for monetary relief, even if they no longer hold original shares.
• Class Action Advantages: Joining the lawsuit offers cost efficiency, collective leverage against corporations, and minimal personal involvement compared to individual litigation.
• Immediate Action Required: Given securities law statutes of limitations and the approaching deadline, affected investors should contact qualified legal counsel promptly for free case evaluations.
The case highlights how corporate mergers can involve complex securities violations, making it essential for investors to understand their rights and act quickly when potential fraud is alleged. Legal experts are available to help determine eligibility and guide investors through the process at no upfront cost.
Frequently Asked Questions about the Broadmark Lawsuit
Q1. What is the deadline for investors to seek lead plaintiff status in the Broadmark class action lawsuit? The deadline for investors to seek appointment as lead plaintiff in the Broadmark Class Action Lawsuit is July 28, 2025.
Q2. Who is eligible to participate in the Broadmark lawsuit? Investors who held Broadmark Realty Capital Inc. common stock as of the record date of the May 2023 merger with Ready Capital Corporation are eligible to participate in the class action lawsuit.
Q3. What are the main allegations in the Broadmark lawsuit? The lawsuit alleges that Broadmark and Ready Capital provided misleading proxy statements, concealed financial distress in Ready Capital’s portfolio, and failed to disclose risks in major development projects, particularly a $500 million Ritz-Carlton hotel project in Portland, Oregon.
Q4. Can investors who sold their Broadmark stock still join the class action? Yes, investors who sold their Broadmark shares after acquiring them during the relevant period may still qualify as class members. Former Broadmark investors who received Ready Capital stock following the merger may also be eligible for monetary relief.
Q5. What are the benefits of joining the Broadmark lawsuit? Joining the class action offers several benefits, including cost efficiency through shared legal expenses, increased leverage against large corporations, minimal personal involvement in the legal proceedings, and the potential for compensation without the need to hire individual counsel.
Contact Timothy L. Miles Today About a Broadmark Class Action Lawsuit
If you suffered losses in Broadmark stock, call us today for a free case evaluation about a Broadmark Class Action Lawsuit. 855-846-6529 or tmiles@timmileslaw.com (24/7/365).
Timothy L. Miles, Esq.
Law Offices of Timothy L. Miles
Tapestry at Brentwood Town Center
300 Centerview Dr. #247
Mailbox #1091
Brentwood,TN 37027
Phone: (855) Tim-MLaw (855-846-6529)
Email: tmiles@timmileslaw.com
Website: www.classactionlawyertn.com
