A class action lawsuit has been filed against On Deck Capital by plaintiff, Carl Stitt, on behalf of himself and others similarly situated. Specifically, the class includes all persons besides the defendants who purchased or otherwise acquired On Deck securities pursuant and/or traceable to On Deck’s false and misleading Registration Statement. The statement was issued in connection with On Deck’s initial public offering, which was released on December 16, 2014.
On Deck Capital, based in New York City, offers financing products to small businesses in the United States. The company offers fixed term loans and revolving lines of credit, processing and servicing its loans through its online platform. Its common stock began trading on the New York Stock Exchange on December 17, 2014 under the symbol ONDK.
Procedural Status. The lawsuit was filed on August 4, 2015 and is captioned Carl Stitt v. On Deck Capital, Inc., et al. It was filed in the United States District Court Southern District of New York. Its civil docket number is 1:15-cv-06126. The lead plaintiff decline is October 5, 2015.
The lawsuit alleges that On Deck Capital made false and/or misleading statements and/or failed to disclose that its true rate of default for its loan portfolio was steadily increasing, and the true value of its loan portfolio was in material decline. Consequently, On Deck’s public statements were materially false and misleading at all relevant times.
Less than two months after On Deck’s initial public offering, SeekingAlpha.com published an article that described how the company’s Registration Statement significantly understated the default rate for its loan portfolio. Five weeks later, Compass Point Research & Trading published a report detailing On Deck Capital’s unsustainable business model, including inherent risks with its untested credit model, growing competition, uncertainty in regard to interest rates, and anticipated regulatory threats.
On July 1, 2015, On Deck common stock dropped to a low of $11.15 per share, a decline of over 40% from the initial public offering price. On Deck is now reportedly losing tens of millions of dollars through defaults on its loans.
The class action suit alleges that, as a result of On Deck’s false and/or misleading statements, the company suffered a precipitous decline in the market value, resulting in significant losses and damages to the plaintiff and his fellow class members.
This case is in the notice period. When a shareholder brings suit under certain federal securities law, generally that shareholder must give notice via a press release. This notice starts a sixty-day period of time when any shareholder can investigate the underlying claims of the lawsuit and then elect to bring suit as well. At the end of this sixty-day period, the court appoints one shareholder (or a group of shareholders) to prosecute the securities litigation. We will review the docket again in June and update this page as warranted.