Capitala Finance Corp. (NASDAQ: CPTA)

RM LAW, P.C. announces that a class action lawsuit has been filed on behalf of all persons or entities that purchased Capitala Finance Corp. (NASDAQ: CPTA) (“Capitala” or the “Company”) securities between January 4, 2016, and August 7, 2017, inclusive (the “Class Period”).

Capitala shareholders may, no later than February 26, 2018, move the Court for appointment as a lead plaintiff of the Class.  If you purchased shares of Capitala and would like to learn more about these claims or if you wish to discuss these matters and have any questions concerning this announcement or your rights, contact Richard A. Maniskas, Esquire toll-free at (844) 291-9299 or to sign up online, click here.

Capitala Finance Corporation is a business development company that invests primarily in first and second liens, subordinated debt and, to a lesser extent, equity securities issued by lower and traditional middle-market companies.  Capitala Investment Advisors, LLC (“Capitala Investment Advisors”) manages the Company’s investment activities. The Company’s Board of Directors supervises the Company’s investment activities.  The Company’s executive officers are part of Capitala Investment Advisors’ management team.

Under the Company’s investment advisory agreement with Capitala Investment Advisors (the “Investment Advisory Agreement”), the Company pays Capitala Investment Advisors an annual base management fee based on the Company’s gross assets as well as an incentive fee based on the Company’s performance.

On January 4, 2016, the Company announced that Capitala Investment Advisors agreed to voluntarily waive its quarterly incentive fee.

The Complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements regarding the Company’s business, operational and compliance policies. Specifically, Defendants made false and/or misleading statements and/or failed to disclose that:  (i) Capitala Investment Advisors had been losing professional talent in both underwriting and portfolio management due to the waiving of its incentive fee; (ii) such loss of talent negatively impacted the quality of the Company’s investment portfolio; and (iii) as a result, Capitala’s public statements were materially false and misleading at all relevant times.

On August 7, 2017, the Company revealed during aftermarket hours that six of its investments were on non-accrual status—twice as many as in the previous quarter.

On August 8, 2017, the Company’s Chief Executive Officer Joseph B. Alala III revealed that Capitala Investment Advisors had been losing professional talent in underwriting and portfolio management since waiving its incentive fee, which resulted in a rising number of nonaccrual investments.


On this news, shares of the Company fell $3.82 per share, or approximately 30%, over the next three trading days to close at $8.99 per share on August 10, 2017, damaging investors.

If you are a member of the class, you may, no later than February 26, 2018, request that the Court appoint you as lead plaintiff of the class.  A lead plaintiff is a representative party that acts on behalf of other class members in directing the litigation.  In order to be appointed lead plaintiff, the Court must determine that the class member’s claim is typical of the claims of other class members, and that the class member will adequately represent the class.  Under certain circumstances, one or more class members may together serve as “lead plaintiff.”  Your ability to share in any recovery is not, however, affected by the decision whether or not to serve as a lead plaintiff.  You may retain RM LAW, P.C. or other counsel of your choice, to serve as your counsel in this action.