SAN DIEGO--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP has filed a class action seeking to represent purchasers of Rocket Companies, Inc. (NYSE:RKT) Class A common stock during the period between February 25, 2021 and May 5, 2021, both dates inclusive (the “Class Period”). The Rocket Companies class action lawsuit charges Rocket Companies and certain of its executives with violations of the Securities Exchange Act of 1934. The Rocket Companies class action lawsuit (Qaiyum v. Rocket Companies, Inc., No. 21-cv-11528) was filed in the Eastern District of Michigan and is assigned to Judge Judith E. Levy. A similar lawsuit, captioned Arent v. Rocket Companies, Inc., No. 21-cv-11528, is also pending in the Eastern District of Michigan.
If you suffered substantial losses and wish to serve as lead plaintiff of the Rocket Companies class action lawsuit, please provide your information by clicking here. You can also contact attorney Brian E. Cochran of Robbins Geller by calling 800/449-4900 or via e-mail at bcochran@rgrdlaw.com. Lead plaintiff motions for the Rocket Companies class action lawsuit must be filed with the court no later than August 30, 2021.
CASE ALLEGATIONS: The Rocket Companies class action lawsuit alleges that, throughout the Class Period, defendants made false and misleading statements and failed to disclose that: (i) Rocket Companies’ gain on sale margins were contracting at the highest rate in two years as a result of increased competition among mortgage lenders, an unfavorable shift toward the lower margin Partner Network operating segment and compression in the price spread between the primary and secondary mortgage markets; (ii) Rocket Companies was engaged in a price war and battle for market share with its primary competitors in the wholesale market, which was further compressing margins in Rocket Companies’ Partner Network operating segment; (iii) the adverse trends identified above were accelerating and, as a result, Rocket Companies’ gain on sale margins were on track to plummet at least 140 basis points in the first six months of 2021; (iv) as a result, the favorable market conditions that had preceded the Class Period and allowed Rocket Companies to achieve historically high gain on sale margins had vanished as Rocket Companies’ gain on sale margins had returned to levels not seen since the first quarter of 2019; (v) rather than remaining elevated due to surging demand, Rocket Companies’ company-wide gain-on-sale margins had fallen materially below pre-pandemic averages; and (vi) consequently, defendants’ positive statements about Rocket Companies’ business operations and prospects were materially misleading and/or lacked a reasonable basis.
On May 5, 2021, Rocket Companies reported that it was on track to achieve closed loan volume within a range of only $82.5 billion and $87.5 billion and gain on sale margins within a range of only 2.65% to 2.95% for the second quarter of 2021. At the mid-point, this gain on sale margin estimate equated to a 239 basis point decline year-over-year and a 94 basis point decline sequentially, which represented Rocket Companies’ lowest quarterly gain on sale margin in two years. The stunning collapse in Rocket Companies’ gain on sale margin reflected the fact that the favorable market conditions purportedly being experienced by Rocket Companies during the Class Period had in fact reversed. During a conference call to explain the results, Rocket Companies’ Chief Financial Officer and Treasurer, defendant Julie R. Booth, revealed that the sharp decline in quarterly gain on sale margin was being caused by three factors: (i) pressure on loan pricing; (ii) a product mix shift to Rocket Companies’ lower margin Partner Network segment; and (iii) a compression in price spreads between the primary and secondary mortgage markets. Defendant Booth also admitted that certain of these trends began “at the end of Q1.” On this news, the price of Rocket Companies Class A common stock fell by nearly 17% to close at $19.01 per share. As the market continued to digest the news in the days that followed, the price of Rocket Companies Class A common stock continued to decline, falling to a low of just $16.48 per share by May 11, 2021.
THE LEAD PLAINTIFF PROCESS: The Private Securities Litigation Reform Act of 1995 permits any investor who purchased Rocket Companies Class A common stock during the Class Period to seek appointment as lead plaintiff in the Rocket Companies class action lawsuit. A lead plaintiff is generally the movant with the greatest financial interest in the relief sought by the putative class who is also typical and adequate of the putative class. A lead plaintiff acts on behalf of all other class members in directing the Rocket Companies class action lawsuit. The lead plaintiff can select a law firm of its choice to litigate the Rocket Companies class action lawsuit. An investor’s ability to share in any potential future recovery of the Rocket Companies class action lawsuit is not dependent upon serving as lead plaintiff.
The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
ABOUT ROBBINS GELLER RUDMAN & DOWD LLP: With 200 lawyers in 9 offices nationwide, Robbins Geller Rudman & Dowd LLP is the largest U.S. law firm representing investors in securities class actions. Robbins Geller attorneys have obtained many of the largest shareholder recoveries in history, including the largest securities class action recovery ever – $7.2 billion – in In re Enron Corp. Sec. Litig. The 2020 ISS Securities Class Action Services Top 50 Report ranked Robbins Geller first for recovering $1.6 billion for investors last year, more than double the amount recovered by any other securities plaintiffs’ firm. Please visit https://www.rgrdlaw.com/firm.html for more information.
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