Deadline Alert: Investors of The Bancorp Face Crucial Deadline in Securities Lawsuit Amid Fraud Allegations

Investors in The Bancorp, Inc. (NASDAQ: TBBK) are under a ticking clock as the law firm Faruqi & Faruqi, LLP intensifies its investigation into potential securities fraud. With a May 16, 2025, deadline to seek lead plaintiff status in a federal class action lawsuit, shareholders who incurred losses exceeding $50,000 must act swiftly to assert their rights. The case hinges on allegations that the financial institution misled the market about risks in its real estate bridge loan (REBL) portfolio, flawed credit loss models, and internal control failures.

The Timeline of Alleged Misconduct

The lawsuit traces its origins to three pivotal moments in 2024 and 2025, each marked by sharp declines in TBBK’s stock price following disclosures that contradicted earlier optimistic statements:

1. March 21, 2024: A Culper Research report exposed risks in The Bancorp’s REBL portfolio, revealing that the loans were underwritten with lax standards and held significant default risks. The report triggered a 10.15% single-day drop in the stock.
2. October 24, 2024: The company admitted to increased provisions for credit losses and restated financials, causing a further 14.47% plunge in share price.
3. March 4, 2025: A bombshell announcement revealed that its 2022–2024 financial statements could not be relied upon due to audit approval issues and material weaknesses in internal controls, leading to a 4.38% drop.

The cumulative effect of these revelations has been devastating. Since January 25, 2024—the start of the class period—the stock has lost over 45% of its value, underscoring the depth of investor losses.

Key Allegations and Investor Risks

The complaint accuses The Bancorp’s management of:
- Underestimating default rates in its REBL portfolio, which accounted for nearly half its total loans.
- Using flawed methodologies to calculate credit losses, masking the true risk exposure.
- Failing to implement adequate internal controls, leading to unapproved financial statements.

These missteps, if proven, would constitute violations of the Securities Exchange Act of 1934. The lawsuit seeks to recover losses for investors who purchased shares during the alleged “misstatement period” (January 25, 2024, to March 4, 2025).

Strategic Considerations for Investors

The May 16 deadline is critical for two reasons:
1. Lead Plaintiff Status: Investors with substantial losses may qualify to lead the litigation. This role requires demonstrating the largest financial stake and the ability to represent the class effectively.
2. Class Membership: Even without lead plaintiff status, shareholders who held TBBK stock during the class period can remain passive class members and still benefit from any settlement or judgment.

However, the path to recovery is not guaranteed. Securities class actions often face hurdles, such as proving causation between the alleged misstatements and stock price drops. The Bancorp’s defense may argue that market forces, not fraud, drove the declines.

Conclusion: Weighing the Odds and Acting Prudently

The Bancorp’s case underscores the precarious balance between corporate transparency and investor protection. With the stock down over 45% since early 2024 and the firm’s financial credibility in question, the lawsuit’s outcome could have far-reaching implications.

For investors, the stakes are clear: those holding TBBK shares during the class period should consult legal counsel by the May 16 deadline. The data paints a grim picture—TBBK’s share price has underperformed the broader market by a staggering margin, and its financial restatements and control failures suggest systemic issues.

While litigation is inherently uncertain, the legal team at Faruqi & Faruqi has a track record of recovering over $10 billion for investors. With the deadline looming, shareholders must act decisively to preserve their rights. The clock is ticking, and in the world of securities law, timing is everything.

As the case unfolds, one thing is certain: transparency and accountability will remain central to investor confidence. For The Bancorp, the road to recovery—whether through legal settlements or operational reforms—will be long and fraught with scrutiny.