RM LAW, P.C. announces that a class action lawsuit has been filed on behalf of all persons or entities that purchased Velocity Financial, Inc. ("Velocity Financial" or the "Company") (NYSE: VEL) pursuant to the Company’s January 2020 initial public offering (“IPO”).
Velocity Financial shareholders may, no later than September 28, 2020, move the Court for appointment as a lead plaintiff of the Class. If you purchased shares of Velocity Financial 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.
According to the complaint, Velocity held its IPO on January 22, 2020, offering shares at $13.00 per share for gross proceeds of approximately $100.7 million. In its offering documents, Velocity touted it "ha[d] developed the highly-specialized skill set required to effectively compete in this market" and that this allowed Velocity to have "a durable business model capable of generating attractive risk-adjusted returns for [its] stockholders throughout various business cycles." However, Velocity's offering documents failed to disclose that many of Velocity's loans were in non-accrual status and at least 90 days past due by the time of its IPO. Velocity's true financial condition was revealed on May 13, 2020, when Velocity released its financial results for the first quarter of 2020, the same quarter as its IPO, revealing that its net income decreased 50% sequentially during the quarter to just $2.6 million and that its proportion of non-performing loans had accelerated to $174 million, nearly double the unpaid principal amount year-over-year. Velocity later revealed that by April 2020, non-performing loans accounted for 9.9% of the Company's total portfolio, which was expected, but not disclosed in the offering materials. On this news, Velocity's share price fell more than 80%, to close at just $2.53 per share on May 15, 2020.
If you are a member of the class, you may, no later than September 28, 2020, 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.