Robbins Geller Rudman & Dowd LLP Files Class Action Suit Against Velocity Financial, Inc.
SAN DIEGO–(BUSINESS WIRE)–Robbins Geller Rudman & Dowd LLP (https://www.rgrdlaw.com/cases-velocity-financial-inc-class-action-lawsuit.html) today announced that it filed a class action seeking to represent purchasers of Velocity Financial, Inc. f/k/a Velocity Financial, LLC (NYSE:VEL) common stock pursuant and/or traceable to the Registration Statement and Prospectus (the “Offering Materials”) issued in connection with Velocity’s January 2020 initial public offering (“IPO”). This action was filed in the Central District of California and is captioned Berg v. Velocity Financial, Inc., No. 20-cv-06780.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Velocity common stock pursuant and/or traceable to the Offering Materials to seek appointment as lead plaintiff in the Velocity Financial class action lawsuit. A lead plaintiff acts on behalf of all other class members in directing the Velocity Financial class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Velocity Financial class action lawsuit. An investor’s ability to share in any potential future recovery of the Velocity Financial class action lawsuit is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff in the Velocity Financial class action lawsuit, you must move the Court no later than 60 days from today. If you wish to discuss the Velocity Financial class action lawsuit or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Brian E. Cochran of Robbins Geller, at 800/449-4900 or 619/231-1058 or via e-mail at bcochran@rgrdlaw.com. You can view a copy of the complaint as filed at https://www.rgrdlaw.com/cases-velocity-financial-inc-class-action-lawsuit.html.
The Velocity Financial class action lawsuit charges Velocity, certain of its officers and directors, its equity sponsor and controlling shareholder, and the underwriters of the IPO with violations of the Securities Act of 1933. Velocity is a real estate finance company that originates and manages loans issued to borrowers nationwide to finance the purchase of small residential rental and commercial real estate investment properties.
The complaint alleges that defendants failed to disclose that, at the time of the IPO, the Company’s non-performing loans had dramatically increased in size from the figures provided in the Offering Materials, as measured by both the amount of unpaid principal balance and as a percentage of the Company’s overall loan portfolio. In addition, defendants failed to provide any information to investors regarding the potential impact of the novel coronavirus on Velocity’s business and operations, despite the fact that the international spread of the virus had already been confirmed at the time of the IPO. The failure to disclose the substantial and growing proportion of the Company’s loans that were non-performing and/or on non-accrual status as of the IPO rendered the statements contained in the Offering Materials regarding the quality of the Company’s loan portfolio and underwriting practices materially misleading.
On April 8, 2020, Velocity announced its financial and operational results for the 2019 fourth quarter and full year. The Company stated it had suspended all loan origination operations due to market volatility and that it was experiencing enhanced delinquencies in its loan portfolio and had implemented various strategies to attempt to “‘address this challenge.’” On May 13, 2020, Velocity announced its financial and operational results for the first quarter of 2020 – the same quarter in which the IPO was conducted. The Company stated that its net income had decreased 50% sequentially during the quarter to just $2.6 million.
By May 15, 2020, Velocity stock was trading at just $2.53 per share – more than 80% below the price investors paid for the stock in the IPO just four months previously.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.
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Contacts
Robbins Geller Rudman & Dowd LLP
Brian E. Cochran, 800-449-4900
bcochran@rgrdlaw.com