SAN DIEGO, Oct. 8, 2015 /PRNewswire/ -- Robbins Geller
Rudman & Dowd LLP ("Robbins Geller")
(http://www.rgrdlaw.com/cases/fifthstreet/) previously announced
the filing of a class action lawsuit in the United States District
Court for the Southern District of New
York on behalf of purchasers of Fifth Street Finance Corp.
("FSC") (NASDAQ:FSC) common stock during the period between
July 7, 2014 and February 6, 2015 (the "Class Period"). The
case, Randall v. Fifth Street Finance Corp., et al., No.
1:15-cv-07759, was filed on October 1,
2015 and has been assigned to the Honorable Judge
Lewis A. Kaplan. Investors in
FSC, Fifth Street Asset Management Inc. ("FSAM") (NASDAQ:FSAM) and
Fifth Street Senior Floating Rate Corp. ("FSFR") (NASDAQ:FSFR)
suffered losses due to the previously undisclosed information
becoming public.
![Robbins Geller, with 200 lawyers in ten offices, represents U.S. and international institutional investors in contingency-based securities and corporate litigation. The firm has obtained many of the largest securities class action recoveries in history, including the largest securities class action judgment. Please visit http://www.rgrdlaw.com for more information. Robbins Geller, with 200 lawyers in ten offices, represents U.S. and international institutional investors in contingency-based securities and corporate litigation. The firm has obtained many of the largest securities class action recoveries in history, including the largest securities class action judgment. Please visit http://www.rgrdlaw.com for more information.](http://photos.prnewswire.com/prnvar/20150415/198876LOGO)
If you purchased FSC common stock during the Class Period and
suffered losses in connection therewith, you may qualify to serve
as a lead plaintiff in this action. The court-appointed lead
plaintiff is generally the investor with the largest financial
interest in the relief sought by the class that is adequate and
typical of other 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 of whether or not to serve
as a lead plaintiff. The deadline to file lead plaintiff
motions in this case is November 30,
2015. To inquire about serving as lead plaintiff or discuss
this action or notice, please contact plaintiff's counsel, Darren
Robbins of Robbins Geller at 800/449-4900 or 619/231-1058, or via
e-mail at djr@rgrdlaw.com. You can view a copy of the
complaint at http://www.rgrdlaw.com/cases/fifthstreet/.
The complaint charges FSC, FSAM and certain of their officers
and directors with violations of the Securities Exchange Act of
1934. FSC is a specialty finance company managed by FSAM that
lends to and invests in small and mid-sized companies, primarily in
connection with investments by private equity sponsors. FSC's
founder and one-time Chairman and CEO Leonard M. Tannenbaum and his associates were
the private owners of FSAM before taking it public in an initial
public offering ("IPO") in October
2014.
The complaint alleges that defendants engaged in a fraudulent
scheme and course of business designed to artificially inflate
FSC's assets and investment income to increase FSAM's revenue
during the Class Period. Specifically, the complaint alleges
that, among other things, defendants pushed FSC into increasingly
risky, speculative investments at unsustainable leverage levels,
delayed writing down impaired investments to create the appearance
of increasing revenues for FSAM, and systematically overstated the
income generated by FSC's investments and the fair value of its
portfolio while simultaneously providing investors and the market
with false and misleading portrayals of FSC's business trends and
expected performance. Because FSAM's revenues are tied
directly to FSC's gross assets and recorded income, the larger
FSC's asset portfolio became and the more income it recorded, the
greater FSAM's revenue stream would appear to investors, and the
higher the price at which defendant Tannenbaum and his associates
could sell their FSAM shares to the public.
On October 29, 2014, defendants
sold 6 million FSAM shares for $17
per share, with Tannenbaum and his associates receiving tens of
millions of dollars from the sale of their shares in the IPO.
The gross cash proceeds for the IPO alone were approximately
$100 million, a single payout of more
than 160 times defendant Tannenbaum's base salary from FSAM for all
of 2014.
Then, on February 9, 2015, FSC
reported its fiscal results for the quarter ended December 31, 2014 – the same quarter in which
defendants conducted the FSAM IPO. FSC revealed that, around
the time its executives were taking FSAM public, it had moved
$106 million worth of investments to
non-accrual status with an additional $17
million likely to be designated non-accrual in the
subsequent quarter, which together constituted about 5% of the
Company's entire debt investment portfolio on a cost basis.
The Company also revealed that, even though the total assets of
FSC's investment portfolio had continued to increase to nearly
$3 billion by quarter end, the net
investment income received by the Company had actually decreased by
6% compared to the prior quarter. Unrealized depreciation on
the Company's investments for the quarter had ballooned to
$62 million, while its quarterly net
realized losses were $17.6
million. And, despite having announced a 10% dividend
increase only four months before taking FSAM public, FSC declared
that it would issue zero dividends for February 2015, while decreasing future dividend
payments by more than 30% as part of a more "conservative" dividend
policy. On this news, the price of FSC common stock declined
nearly 15% on volume of almost 11 million shares.
Plaintiff seeks to recover damages on behalf of all purchasers
of FSC common stock during the Class Period (the "Class").
The plaintiff is represented by Robbins Geller, which has extensive
experience in prosecuting investor class actions including actions
involving financial fraud.
Robbins Geller, with 200 lawyers in ten offices, represents U.S.
and international institutional investors in contingency-based
securities and corporate litigation. The firm has obtained
many of the largest securities class action recoveries in history
and was ranked first in both the amount and number of shareholder
class action recoveries in ISS's SCAS Top 50 report for 2014.
Please visit http://www.rgrdlaw.com/cases/fifthstreet/ for more
information.
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SOURCE Robbins Geller Rudman & Dowd LLP