Ready Capital Lawsuit Alert: Investor Deadline Looms as Ex-Attorney General-Backed Firm Seeks Class Action Leadership

Investors in Ready Capital Corporation (NYSE: RC) face a critical deadline as the securities class-action lawsuit against the company intensifies. Kahn Swick & Foti, LLC (KSF), a law firm co-founded by former Louisiana Attorney General Charles C. Foti, Jr., is urging shareholders who lost over $100,000 to apply for lead plaintiff status by May 5, 2025. The case alleges that Ready Capital and its executives concealed risks in its commercial real estate (CRE) loan portfolio, inflating stock prices before a catastrophic March 3, 2025, disclosure triggered a 27% single-day plunge in shares.

The Allegations: A Portfolio in Crisis

The lawsuit, Quinn v. Ready Capital Corporation, accuses the company of misleading investors between November 7, 2024, and March 2, 2025, by omitting material facts about its CRE loan portfolio. Central to the claims are:
- Hidden Non-Performing Loans: Ready Capital allegedly failed to disclose that $284 million in non-performing CRE loans were deemed uncollectible.
- Misleading Reserves: The company waited until March 3, 2025, to fully reserve for these loans, causing a $1.80 per share quarterly loss and a $2.52 annual loss.
- Inflated Financial Metrics: The delayed disclosures revealed a surge in leverage to 3.8x, up from 3.3x the prior quarter, signaling heightened financial instability.

The March 3 announcement sent RC shares plummeting from $6.93 to $5.07, erasing nearly $200 million in market capitalization.

KSF’s Role: A Legal Team with Political Muscle

While the lawsuit is spearheaded by KSF’s managing partner Lewis Kahn—a veteran securities litigator—the firm’s reputation is bolstered by the involvement of Charles C. Foti, Jr., a partner who served as Louisiana’s Attorney General from 1992 to 1996. This blend of private-sector litigation expertise and public-service credibility positions KSF to pursue aggressive remedies.

Kahn’s track record includes landmark settlements like the $165 million BlackBerry case and $100 million Halliburton settlement. Foti’s political background underscores the firm’s ability to navigate complex regulatory landscapes, though his role in this case is advisory rather than direct legal representation.

Investor Implications: Act Now or Risk Losing Out

The May 5 deadline is non-negotiable for those seeking to lead the class action. Key considerations for investors:
- Economic Impact: The $284 million in reserves alone represents 15% of Ready Capital’s 2023 total assets, highlighting the severity of the alleged mismanagement.
- Recovery Potential: If successful, the case could mirror KSF’s recent $120 million settlement in the In re Bank of America Corp. Securities Litigation.
- Contingency Fees: Legal costs are tied to recovery, ensuring access for all investors regardless of loss size.

Data-Driven Risks and Rewards

Ready Capital’s leverage ratio jumped to 3.8x in Q4 2024, exceeding the 3.0x–3.5x range typical for stable real estate investment trusts (REITs). This metric, coupled with a 27% stock drop in one day, suggests the market viewed the disclosures as a systemic failure.

Meanwhile, KSF’s involvement is no small factor: the firm secured $185 million in recoveries in 2024 alone, including a $72 million settlement in the Pearlstein v. BlackBerry case. Its partnership with firms like Hagens Berman and Robbins Geller—both active in the RC case—adds weight to the litigation’s prospects.

Conclusion: A Crossroads for Shareholders

The Ready Capital lawsuit hinges on whether the company’s omissions about its CRE portfolio materially misled investors. With a 27% stock collapse and a leverage ratio at crisis levels, the evidence points toward systemic issues that were deliberately obscured.

Investors holding RC shares during the class period have until May 5, 2025, to seek lead plaintiff status—a role that grants significant influence over litigation strategy and recovery. For those who miss the deadline, passive participation remains an option, but the chance to shape the case’s outcome vanishes.

As KSF’s record shows, timely action often correlates with higher recovery rates. With the stock still down 30% year-to-date and CRE market risks persisting, this case could set a precedent for transparency in real estate lending—a lesson investors and regulators alike will be watching closely.

The clock is ticking. For affected shareholders, the question is no longer if to act, but how quickly.