LOS ANGELES--(BUSINESS WIRE)--The Law Offices of Frank R. Cruz announces that a class action lawsuit has been filed on behalf of persons and entities that purchased or otherwise acquired Velocity Financial, Inc. ("Velocity" or the "Company") (NYSE: VEL) securities pursuant and/or traceable to the Registration Statement issued in connection with the Company’s January 2020 initial public offering (“IPO”). Velocity investors have until September 28, 2020 to file a lead plaintiff motion.
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In January 2020, Velocity completed its initial public offering ("IPO"), selling 7,250,000 shares at $13 per share and raising approximately $94 million.
On May 13, 2020, the Company announced its financial results for first quarter 2020, the same quarter in which the IPO was conducted. Velocity reported a 50% decrease in net income and disclosed that its loan originations would remain suspended indefinitely, effectively halting potential growth in the Company’s loan portfolio. Moreover, the Company stated that its proportion of non-performing loans had accelerated to $174 million, nearly double the unpaid principal amount year over year.
Since the IPO, the Company’s shares have traded as low as $2.47 per share, or 80% below the $13 IPO price.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) that at the time of Velocity's initial public offering (the "IPO"), the Company's non-performing loans had dramatically increased in size from the figures provided in the Registration Statement and Prospectus that Velocity had issued in connection with the IPO; (2) that 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; (3) as a result, 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 Registration Statement and Prospectus regarding the quality of the Company's loan portfolio and underwriting practices materially misleading.
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If you purchased Velocity securities during the Class Period, you may move the Court no later than September 28, 2020 to ask the Court to appoint you as lead plaintiff. To be a member of the Class you need not take any action at this time; you may retain counsel of your choice or take no action and remain an absent member of the Class. If you purchased Velocity securities, have information or would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Frank R. Cruz, of The Law Offices of Frank R. Cruz, 1999 Avenue of the Stars, Suite 1100, Los Angeles, California 90067 at 310-914-5007, by email to firstname.lastname@example.org, or visit our website at www.frankcruzlaw.com. If you inquire by email please include your mailing address, telephone number, and number of shares purchased.
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