Velocity Financial, Inc. (VEL) Accused of Misleading Shareholders
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 purchased Velocity Financial, Inc. (VEL) securities traceable to its January 2020 IPO, you have until September 28, 2020, to ask the court to be appointed lead plaintiff for the class.
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