Your AI small-business ally, constantly scanning for both hidden risks and game-changing opportunities in this economy.

Ready Capital Lawsuit: Investors Face Critical Deadline as Securities Fraud Allegations Unfold

Nathaniel StoneMonday, Apr 21, 2025 6:28 am ET

7min read

The securities fraud lawsuit against Ready Capital Corporation (NASDAQ: RC) has sent shockwaves through the investment community, with plaintiffs alleging the company misled investors about the health of its commercial real estate (CRE) portfolio. As the legal battle unfolds, investors who purchased shares during the class period—November 7, 2024, to March 2, 2025—must act swiftly to protect their rights. With a May 5, 2025, deadline to seek lead plaintiff status, the stakes are high for those impacted by what the lawsuits describe as “materially false and misleading statements.”

The Allegations: A Portfolio in Disarray

At the heart of the case is Ready Capital’s alleged misrepresentation of its CRE loan portfolio. According to the lawsuits filed by Bleichmar Fonti & Auld LLP and The Gross Law Firm, the company falsely claimed its CRE assets were “showing stabilizing credit metrics” and positioned to capitalize on market “tailwinds.” In reality, the complaints assert that:
1. Non-performing loans (NPLs) in CRE were understated, with many deemed uncollectible.
2. Reserves for these NPLs were concealed, artificially inflating financial health.
3. CECL (Current Expected Credit Loss) and valuation allowances were inaccurately reported, leading to an overstatement of equity.

The truth began to unravel on March 3, 2025, when Ready Capital disclosed a $382 million charge, including $284 million in CECL and valuation allowances for non-performing loans. This revelation caused its stock to plummet by 27%—dropping from $6.93 to $5.07 per share—a stark indicator of investor confidence loss.

Financial Fallout and Strategic Shifts

The lawsuits highlight severe financial missteps. SEC filings reveal that Ready Capital’s CRE segment faced mounting pressure:
- Full reserves for NPLs: In its Q4 2024 report, the company acknowledged it had fully reserved for all non-performing CRE loans, a move that reduced book value but aimed to “stabilize” the portfolio.
- CECL reserve spikes: The CECL reserve increased by $277.28 million in Q4 2024 alone, reflecting heightened credit risks.
- Net interest margin strain: The CRE segment reported a net interest loss of $(240.3 million) in Q4 2024 due to massive provisions.

To address liquidity concerns, Ready Capital cut its dividend to $0.125 per share (from $0.25) and pursued debt issuance, including $220 million in senior secured notes in February 2025. However, these actions underscore the severity of the CRE portfolio’s problems.

Legal Implications and Investor Action

The lawsuits, filed under Sections 10(b) and 20(a) of the Securities Exchange Act of 1934, seek to hold Ready Capital and its executives accountable for alleged fraud. Key deadlines include:
- May 5, 2025: Deadline for investors to move to seek lead plaintiff status.
- April 30, 2025: Expected court ruling on an appeal of the case, which was initially dismissed in January 2024.

Investors holding shares during the class period are urged to contact The Gross Law Firm or Bleichmar Fonti & Auld LLP to evaluate their options. With contingency fee structures, legal costs are deferred until a recovery is secured.

Conclusion: A Watershed Moment for Accountability

The Ready Capital lawsuit represents a critical test of corporate transparency in the CRE sector. The $382 million charge and 27% stock plunge—driven by disclosures of concealed NPLs—paint a clear picture of the harm caused by alleged misstatements.

Investors who ignored red flags, such as the rising CECL reserves and stagnant CRE performance, now face significant losses. The May 5 deadline is non-negotiable for those seeking a voice in the litigation.

As the case advances, the court’s April 30 ruling on the appeal will determine the lawsuit’s trajectory. For now, the message is clear: transparency in financial reporting is non-negotiable, and investors must act swiftly to safeguard their interests.

Data sources: Ready Capital SEC filings, lawsuit complaints, and market data.

Disclaimer: The news articles available on this platform are generated in whole or in part by artificial intelligence and may not have been reviewed or fact checked by human editors. While we make reasonable efforts to ensure the quality and accuracy of the content, we make no representations or warranties, express or implied, as to the truthfulness, reliability, completeness, or timeliness of any information provided. It is your sole responsibility to independently verify any facts, statements, or claims prior to acting upon them. Ainvest Fintech Inc expressly disclaims all liability for any loss, damage, or harm arising from the use of or reliance on AI-generated content, including but not limited to direct, indirect, incidental, or consequential damages.