Broadmark Class Action Lawsuit: Breaking: Broadmark Class Action Lawsuit Deadline Approaches [2025]

The deadline for Broadmark Class Action Lawsuit is coming up faster, and affected investors have until July 28, 2025 to join the legal action against the real estate investment firm. This major case, Grant v. Broadmark Realty Capital, focuses on alleged federal securities law violations tied to the May 2023 merger with Ready Capital Corporation.

The Broadmark Class Action Lawsuit claims Broadmark made misleading statements about both companies’ financial health during the merger process. While shareholders gave their approval on May 30, 2023, Ready Capital failed to report proper credit loss reserves because of problems in a key development project that made up approximately $500 million of its loan portfolio.

On top of that, it appears many of Ready Capital’s borrowers struggled with high interest rates.

These alleged misrepresentations led to Ready Capital’s stock price staying well below the merger price, which caused losses for investors who trusted the companies’ statements. Investors who owned Broadmark securities during the merger’s record date might have legal rights they need to protect. The deadline is getting closer, so affected investors should act now to take part in this class action case.

Investors Allege Broadmark Misled Shareholders Before Merger

The merger between Broadmark Realty Capital Inc. and Ready Capital Corporation became the center of a major securities fraud lawsuit.

Merger approved May 30, 2023

Broadmark shareholders gave their approval for the Ready Capital merger on May 30, 2023. The transaction closed the next day. The merger agreement converted each Broadmark share into 0.47233 shares of Ready Capital common stock.

Shareholders received cash for any fractional shares. Broadmark’s common stock stopped trading publicly after this. The NYSE suspended trading before the market opened on May 31. Ready Capital expanded its board of directors by adding three new members: Daniel J. Hirsch, Kevin M. Luebbers, and Pinkie D. Mayfield.

Proxy statement allegedly contained false information

The Broadmark Class Action Lawsuit claims that the proxy statement asking for Broadmark shareholder support had misleading or false information. Ready Capital did not disclose several key facts about its financial health.

The Broadmark Lawsuit states that many borrowers in Ready Capital’s portfolio struggled with high interest rates. The oversupply of multifamily properties in Ready Capital’s markets made it hard for borrowers to raise rents enough to cover their growing debt costs.

The Broadmark Class Action Lawsuite expresses concerns about a troubled $500 million Ritz-Carlton development project in Portland, Oregon. Ready Capital acquired this project through its previous Mosaic Real Estate Credit purchase. The project faced “catastrophic setbacks” with cost overruns, delays in construction, and not enough funding.

Stock price dropped post-merger

Former Broadmark shareholders watched Ready Capital’s stock price plummet after the merger. The stock dropped over 60%, falling from $10.11 to under $4.00 per share. Ready Capital’s financial results got worse. Earnings fell to just $0.07 per share, which was nowhere near what they projected. The company cut its annual dividend to $0.50, contradicting their pre-merger financial projections.

These problems came from hidden issues in Ready Capital’s portfolio. The company moved about $1.20 billion in troubled loans to a liquidation portfolio.

How the Alleged Misconduct Affected Investor Portfolios

Broadmark shareholders faced high financial losses after the merger with Ready Capital. The proxy statement’s alleged misrepresentations hit investment portfolios in several ways.

Loss causation and economic damage

Ready Capital’s misleading statements led to clear investor losses, as shown in the lawsuit. The revelation of the troubled $500 million Ritz-Carlton project in Portland and news about distressed borrowers in Ready Capital’s portfolio caused direct economic damage to shareholders. Ready Capital’s stock price has stayed well below the merger price since the Broadmark Class Action Lawsuit filing.

The company’s public statements were “false and materially misleading throughout the Merger period,” which caused investments to lose value.

Impact on dividend and book value expectations

The merger brought more losses to former Broadmark investors as dividend and book value projections fell short. Ready Capital’s financial projections about distributable earnings per share, dividends per share, and book value had “no basis in fact when made”. The dividend payout ratio dropped to an unsustainable -0.48, which showed the company was using savings to keep paying dividends.

Broadmark’s book value per share was about 6.98 before the merger, but fell sharply afterward. The company’s 3-year dividend growth rate dropped to -0.56%, which pointed to ongoing problems.

Market reaction after truth was revealed

The market reacted strongly once Ready Capital’s financial problems came to light. Broadmark’s shares dropped 33% in the year before the lawsuit filing. The stock fell another 4.8% over three months as investors learned about these troubling developments.

The merger, which promised a 41% premium based on closing price, ended up causing major portfolio losses. The lawsuit states that “when the market learned the truth about the merger, investors suffered damages”.

What Legal Options Do Affected Shareholders Have?

Investors affected by the Broadmark-Ready Capital merger can take legal action through an ongoing class action lawsuit filed in the US District Court for the Western District of Washington.

Class action mechanism explained

The Broadmark Class Action Lawsuit works under a “fraud-on-the-market” claim mechanism. This broadens the private right of action under Rule 10b-5. Shareholders who owned Broadmark common stock during the May 2023 merger can join together instead of filing separate lawsuits. The collective action helps cut litigation costs for individual investors.

Defendants often try to show that misrepresentations didn’t affect stock prices. However, the class action framework gives affected investors substantial power.

Lead plaintiff selection process

The Private Securities Litigation Reform Act of 1995 (PSLRA) allows any Broadmark common stockholder from the merger record date to apply as lead plaintiff. The court picks the investor or group with “the largest financial interest in the relief sought” who meets typicality and adequacy requirements. This lead plaintiff represents all class members and guides the litigation.

They can choose their preferred law firm to represent the class. The deadline to file lead plaintiff motions with the court is July 28, 2025. In spite of that, investors can still receive potential recovery without becoming lead plaintiff.

Legal requirements to prove securities fraud

The Broadmark Lawsuit requires plaintiffs to prove several elements. They must show material misrepresentation or omission in the proxy statements. The plaintiffs need to demonstrate scienter—proving defendants acted with intent to deceive. Direct evidence like statements in proxy materials can establish reliance on these misrepresentations.

Plaintiffs must connect the misrepresentations to financial damages through economic loss and loss causation. Securities litigation attorneys familiar with class action procedures can help investors review their potential claims.

What Should Investors Do Before the July 28, 2025 Deadline?

The Broadmark Class Action Lawsuit deadline is fast approaching. Affected shareholders must act now to protect their interests. The courts set July 28, 2025 as the final date to file lead plaintiff motions in this securities fraud case.

Assess your financial losses

Investors should calculate their financial damages from the alleged misrepresentations. Anyone who owned Broadmark securities during the May 2023 merger with Ready Capital can participate. Shareholders with substantial losses have stronger positions to become lead plaintiffs. Documentation of purchase prices, share counts during the merger, and subsequent value drops will establish your financial stake in the lawsuit outcome.

Talk to securities litigation attorneys

Securities litigation firms can help affected investors understand their options. Several law offices provide free consultations about this case, including the Law Offices of Timothy L. Miles. (855) 846-6529.  These consultations let shareholders discuss their situation, recovery options, and lead plaintiff eligibility. Note that investors aren’t automatically represented by an attorney until class certification happens.

Keep track of case developments

Shareholders should stay updated about the lawsuit’s progress. Law firms handling the case post regular updates on their websites and through press releases. You can sign up for case alerts with firms investigating the merger. Court filings and financial news sources help shareholders make better decisions as the case moves through litigation.

Know your rights under federal law

The Private Securities Litigation Reform Act gives investors several choices. You can seek appointment as lead plaintiff, join as regular class members, or stay absent class members. Your right to share in potential recovery doesn’t depend on being lead plaintiff. Lead plaintiffs represent all class members and choose their preferred law firm. These class action lawsuits often take months or years to resolve based on case complexity and settlement negotiations.

Conclusion

Final Thoughts on the Broadmark Class Action Lawsuit

The Broadmark Class Action Lawsuit stands as a major legal battle for investors who lost money after the May 2023 merger with Ready Capital Corporation. This piece analyzes the alleged securities violations, their financial effects, and legal options available to affected shareholders.

Without doubt, the July 28, 2025 deadline to join this legal action remains the biggest concern. Affected investors need to act fast to protect their rights. The Broadmark Class Action Lawsuit claims Ready Capital misled investors about its financial health during the merger process. This includes issues with a troubled $500 million Ritz-Carlton development and distressed borrowers in its portfolio.

Many former Broadmark shareholders saw their investments sink as Ready Capital’s stock price dropped well below the merger price. The company cut dividends and revealed worrying financial metrics that contradicted what they promised before the merger.

Legal action through class action lawsuits like the Broadmark Class Action Lawsuit gives investors the quickest way forward. Investors should collect proof of their losses, talk to securities litigation experts, and stay updated on case developments. Not everyone can be lead plaintiff, but all affected shareholders might get a share of any recovery.

The case expresses how crucial corporate transparency becomes during mergers. Investors depend on accurate information to make smart choices. Companies that fail to share key details can wreck individual portfolios and shake market confidence.

Courts will decide if Ready Capital and Broadmark broke securities laws during their merger. Right now, affected investors must take action before the deadline to protect their interests under federal securities laws.

Frequently Asked Questions About the Broadmark Lawsuit

Q1. What is the deadline for joining the Broadmark Class Action Lawsuit? The deadline for joining the Broadmark Class Action Lawsuit is July 28, 2025. Affected investors must file lead plaintiff motions with the court by this date to participate in the legal action.

Q2. Who is eligible to participate in the Broadmark Class Action Lawsuit? Investors who owned Broadmark securities as of the record date for the May 2023 merger with Ready Capital Corporation are eligible to participate in the lawsuit. This includes shareholders who may have experienced financial losses due to the alleged misrepresentations.

Q3. How long does a class action lawsuit typically take to resolve? Class action lawsuits can vary in duration, but they often take around two to three years to resolve. Some cases may be settled more quickly, while others, especially those involving appeals, can take several years to reach a conclusion.

Q4. Do I need to be a lead plaintiff to benefit from the lawsuit? No, you don’t need to be a lead plaintiff to potentially benefit from the lawsuit. All eligible class members can share in any potential recovery, regardless of whether they serve as lead plaintiff or not.

Q5. What should I do if I believe I’m affected by the Broadmark lawsuit? If you believe you’re affected, you should evaluate your financial losses, consult with a securities litigation attorney such as Timothy L. Miles and gather relevant documentation of your investments, and consider filing a lead plaintiff motion before the deadline. It’s also important to stay informed about case developments. (855) 846-6529.