Securities Litigation Partner James (Josh) Wilson Encourages Investors Who Suffered Losses Exceeding $50,000 In Rocket To Contact Him Directly To Discuss Their Options
NEW YORK, NY - (NewMediaWire) - August 29, 2021 - Faruqi & Faruqi, LLP, a leading national securities law firm, is investigating potential claims against Rocket Companies, Inc. (“Rocket” or the “Company”) (NYSE: RKT) and reminds investors of the August 30, 2021 deadline to seek the role of lead plaintiff in a federal securities class action that has been filed against the Company.
If you suffered losses exceeding $50,000 investing in Rocket stock or options between February 25, 2021 and May 5, 2021 and would like to discuss your legal rights, call Faruqi & Faruqi partner Josh Wilson directly at 877-247-4292 or 212-983-9330 (Ext. 1310). You may also click here for additional information: www.faruqilaw.com/RKT.
There is no cost or obligation to you.
Faruqi & Faruqi is a leading minority and Woman-owned national securities law firm with offices in New York, Delaware, Pennsylvania, California and Georgia.
As detailed below, the lawsuit focuses on whether the Company and its executives violated federal securities laws by making false and/or misleading statements and/or failing to disclose that: (1) Rocket’s 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; (2) Rocket 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’s Partner Network operating segment; (3) the adverse trends identified above were accelerating and, as a result, Rocket’s gain on sale margins were on track to plummet at least 140 basis points in the first six months of 2021; (4) as a result of the above, the favorable market conditions that had preceded the Class Period and allowed Rocket to achieve historically high gain on sale margins had vanished as the Company’s gain on sale margins had returned to levels not seen since the first quarter of 2019; (5) rather than remaining elevated due to surging demand, Rocket’s Company-wide gain-on-sale margins had fallen materially below recent historical averages; and (6) as a result of the foregoing, defendants’ positive statements about the Company’s business operations and prospects were materially misleading and/or lacked a reasonable basis.
On May 5, 2021, Rocket issued a press release announcing its first quarter results and second quarter outlook. Rocket 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 the Company’s lowest quarterly gain on sale margin in two years. The collapse in the Company’s gain on sale margin reflected the fact that the favorable market conditions purportedly being experienced by the Company during the Class Period had in fact reversed. During a conference call to explain the results, Defendant 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’s 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”—i.e., before the massive insider sales by RHI.
On this news, Rocket’s Class A common stock price fell $3.79 per share, or 16.62%, to close at $19.01 per share on May 6, 2021, on heavy volume of over 37 million shares traded. As the market continued to digest the news in the days that followed, Rocket’s Class A common stock price continued to decline, falling to a low of just $16.48 per share by May 11, 2021.
The court-appointed lead plaintiff is the investor with the largest financial interest in the relief sought by the class who is adequate and typical of class members who directs and oversees the litigation on behalf of the putative class. Any member of the putative class may move the Court to serve as lead plaintiff through counsel of their choice, or may choose to do nothing and remain an absent class member. Your ability to share in any recovery is not affected by the decision to serve as a lead plaintiff or not.
Faruqi & Faruqi, LLP also encourages anyone with information regarding Rocket’s conduct to contact the firm, including whistleblowers, former employees, shareholders and others.
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