Ready Capital Investors with $100K+ Losses Have Window to Lead Securities Fraud Lawsuit

Investors who purchased shares of Ready Capital Corporation (NYSE: RC) between November 7, 2024, and March 2, 2025, and suffered losses exceeding $100,000 now have a critical opportunity to shape the outcome of a federal securities fraud lawsuit. The deadline to apply for lead plaintiff status in the case, which accuses the company of concealing material risks in its commercial real estate (CRE) portfolio, is May 5, 2025.

The Allegations: A Hidden Crisis in CRE Lending

The lawsuit, filed in the U.S. District Court for the Southern District of New York, claims Ready Capital misled investors about the health of its CRE loan portfolio. Key accusations include:
- Non-performing loans: The company allegedly failed to disclose that significant CRE loans were unlikely to be repaid.
- Financial misstatements: Ready Capital allegedly understated the reserves needed to cover these non-performing loans, inflating its financial results.
- Risk omissions: Executives allegedly downplayed rising leverage ratios and the impact of deteriorating CRE markets.

On March 3, 2025, Ready Capital disclosed a $1.80 per share quarterly net loss, revealing $284 million in reserves for nonperforming CRE loans. The admission sent shares plunging 26.8%, closing at $5.07—a stark contrast to the artificially inflated price during the Class Period.

The Legal Landscape: Eligibility and Timing

To qualify as a lead plaintiff, investors must demonstrate more than $100,000 in losses incurred during the Class Period. This threshold aligns with requirements under the Private Securities Litigation Reform Act (PSLRA), which mandates lead plaintiffs to have the “largest financial interest” in the case. While the lawsuit’s court documents do not explicitly state this figure, the PSLRA’s $50 million threshold for class actions (adjusted for individual cases) sets a precedent for such requirements.

Investors need to act swiftly: motions to become lead plaintiff must be filed by May 5, 2025. The lead plaintiff will oversee litigation, including selecting attorneys and negotiating settlements.

Why This Matters for Investors

The case highlights the risks of investing in firms with opaque financial practices, particularly in real estate lending. Ready Capital’s rapid decline—from a $6.93 share price to $5.07 in a single day—reflects the market’s swift reaction to revelations of hidden losses.

The lawsuit also underscores the importance of due diligence in evaluating companies exposed to CRE markets, which are highly sensitive to interest rate changes and economic downturns. Ready Capital’s leverage ratio surged to 3.8x by Q4 2024, up from 3.3x, signaling increasing financial strain.

Potential Outcomes and Considerations

• Recovery Potential: If the case proceeds to trial or settlement, eligible investors could recover losses. Law firms like Faruqi & Faruqi and Robbins Geller Rudman & Dowd—with recoveries totaling billions in prior cases—emphasize their contingency fee models, requiring no upfront costs for participation.
• Deadline Risks: Missing the May 5 deadline forfeits the right to lead the case, even for large-loss investors.
• Class Certification: The court must first certify the case as a class action, which could hinge on demonstrating widespread harm to investors.

Conclusion: Act Quickly or Risk Losing Ground

The Ready Capital lawsuit represents a pivotal moment for investors who bought shares during the Class Period. With losses exceeding $100,000, eligible investors have a unique opportunity to influence litigation outcomes. However, the May 5 deadline is non-negotiable.

The data paints a clear picture:
- Stock Drop: A 26.8% decline on March 3, 2025, erased over $100 million in market capitalization.
- Reserves: The $284 million write-down for nonperforming loans underscores the severity of the company’s financial missteps.
- Legal Track Record: Firms involved in the case have secured recoveries exceeding $2 billion in recent years, suggesting significant potential for compensation.

For investors, the choice is stark: act by May 5 to assert leadership, or risk leaving recovery efforts to others. The clock is ticking.

This article is for informational purposes only and should not be considered legal or investment advice. Consult a professional before taking action.