Securities fraud class action filed against Rocket Companies, Inc.
Radnor, Pa .– (Newsfile Corp. – Aug. 21, 2021) – Law firm Kessler Topaz Meltzer & Check, LLP reminds investors at Rocket Companies, Inc. (NYSE: RKT) (“Rocket”) that one category securities fraud lawsuit has been filed on behalf of those who purchased or acquired Class A common stock of Rocket between February 25, 2021 and May 5, 2021, inclusive (the “Class Period”).
Deadline Reminder: Investors Who Have Purchased or Acquired Class A Common Shares of Rocket during the Class Action Period may, no later than August 30, 2021, seek to be appointed as principal applicant representative of the group. For more information or to find out how to participate in this dispute, please contact Kessler Topaz Meltzer & Check, LLP: James Maro, Esq. (484) 270-1453; toll free at (844) 887-9500; by e-mail to [email protected]; Where Click on https://www.ktmc.com/rocket-companies-class-action-lawsuit?utm_source=PR&utm_medium=link&utm_campaign=rocket
Rocket is an online mortgage lender that operates the Rocket Mortgage online platform, which allows clients to apply for and manage mortgages over the Internet or using Rocket’s proprietary mobile phone application. Ninety percent of Rocket’s income comes from creating, closing, selling and managing mortgages. Rocket operates two main segments: (1) the Direct-to-Consumer segment; and (2) the partner network segment. In its network of partners, Rocket partners with third parties who use its platform to provide mortgage solutions to their clients. The partner network has lower operating margins because Rocket shares the profits with its partners.
The Class Period begins on February 25, 2021, when Rocket issued a press release titled, in part, “Rocket Companies Experiences Explosive Growth,” which announced Rocket’s financial results for the fourth quarter and full year of 2020 Rocket reported, among other things, a closed loan origination volume of $ 107.2 billion and a sales margin gain of 4.41% for the fourth quarter. Rocket pointed out that he had “[i]increased sales margin gain of 100 basis points year-over-year “in the quarter and”[i]Selling margin gain increased by 127 basis points year-on-year to 4.46% “for the full year. Throughout the Class Period, Rocket continued to tout its business activities and minimized the effects of competition on Rocket’s gain on sales margins.
The truth was revealed on May 5, 2021, when Rocket issued a press release announcing its first quarter results and second quarter outlook. Rocket has indicated he is on track to achieve closed loan volume in a range of just $ 82.5 billion and $ 87.5 billion and a gain on sales margins in a range of just 2. , 65% to 2.95% for the second quarter of 2021. At mid-term, this estimated sales margin gain was equivalent to a 239 basis point decline year-over-year and a decrease of 94 basis points sequentially, which was Rocket’s weakest quarterly gain on selling margin in two years. Following this news, the price of Rocket’s Class A common shares increased from $ 22.80 per share at market close on May 5, 2021 to $ 19.01 per share at market close on May 6, 2021, or a drop of nearly 17%.
The complaint alleges that throughout the Class Period, the Defendants made false and / or misleading statements and / or failed to disclose that: (1) Rocket’s gains on sales margins were contracting at the rate on higher in two years due to increased competition between mortgage lenders, an unfavorable move towards the operational segment of the low-margin partner network and the compression of the price differential between the primary and secondary mortgage markets; (2) Rocket was engaged in a price war and battle for market share with its main competitors in the wholesale market, which further squeezed the margins of the operating segment of Rocket’s partner network; (3) adverse trends were accelerating and, as a result, the margin gain on Rocket’s sales was on track to decline by at least 140 basis points in the first six months of 2021; (4) As a result of the foregoing, the favorable market conditions which preceded the Class Period and allowed Rocket to achieve historically high selling margin gains had disappeared while Rocket’s selling margin gains had returned to levels not seen since the first quarter of 2019; (5) rather than remain high due to increased demand, Rocket’s gain on selling margins fell significantly below recent historical averages; and (6) as a result of the foregoing, the defendants’ positive statements about Rocket’s business operations and outlook were substantially misleading and / or lacking reasonable basis.
Rocket investors can, no later than August 30, 2021, seek to be appointed as the lead representative of class claimants through Kessler Topaz Meltzer & Check, LLP, or another lawyer, or may choose to do nothing and remain an absent member of the class. A principal plaintiff is a representative party who acts on behalf of all class members in directing the litigation. In order to be named the Principal 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. Your ability to participate in any recovery is not affected by the decision whether or not to serve as the principal applicant.
Kessler Topaz Meltzer & Check, LLP pursues class actions in state and federal courts across the country regarding securities fraud, breach of fiduciary duty, and other violations of state and federal law. Kessler Topaz Meltzer & Check, LLP is a driving force in corporate governance reform and has raised billions of dollars on behalf of institutional and individual investors in the United States and around the world. The firm represents investors, consumers and whistleblowers (private citizens who report fraudulent practices against the government and participate in the recovery of government dollars). The complaint in this action was not filed by Kessler Topaz Meltzer & Check, LLP. For more information on Kessler Topaz Meltzer & Check, LLP, please visit www.ktmc.com.
Kessler Topaz Meltzer & Check, LLP
James Maro, Jr., Esq.
280 route du Roi de Prussia
Radnor, Pennsylvania 19087
(844) 887-9500 (toll free)
To view the source version of this press release, please visit https://www.newsfilecorp.com/release/93930