An investigation was announced on behalf of current long-term investors in shares of Fifth Street Finance Corp. (NASDAQ:FSC concerning potential breaches of fiduciary duties by certain directors of Fifth Street Finance Corp..
Investors who are current long term investors in Fifth Street Finance Corp. (NASDAQ:FSC) shares, have certain options and should contact the Shareholders Foundation at email@example.com or call +1(858) 779 – 1554.
The investigation by a law firm for current long term investors in NASDAQ:FSC stocks follows a lawsuit filed recently against Fifth Street Finance Corp. over alleged securities laws violations. The investigation on behalf of current long term investors in NASDAQ:FSC stocks, concerns whether certain Fifth Street Finance officers and directors are liable in connection with the allegations made in that lawsuit.
According to that complaint filed in the U.S. District Court for the Southern District of New York the plaintiff alleges that the Fifth Street Finance Corp, Fifth Street Asset Management, Inc. violated Federal Securities Laws. The plaintiff claims that between July 7, 2014 and February 6, 2015, defendants allegedly engaged in a fraudulent scheme and course of business designed to artificially inflate Fifth Street Finance Corp’s assets and investment income in order to increase Fifth Street Asset Management’s revenue. More specifically, the plaintiff alleges that , among other things, defendants pushed Fifth Street Finance Corp into increasingly risky, speculative investments at unsustainable leverage levels, delayed writing down impaired investments in order to create the appearance of increasing revenues for Fifth Street Asset Management, and systematically overstated the income generated by Fifth Street Finance Corp’s investments and the fair value of its portfolio, while simultaneously providing investors and the market with false and misleading portrayals of Fifth Street Finance Corp’s business trends and expected performance.
The plaintiff says that on October 29, 2014, defendants sold 6 million Fifth Street Asset Management shares for $17 per share, with Fifth Street Finance Corp’s founder and one-time Chairman and CEO Leonard M. Tannenbaum and his associates receiving tens of millions of dollars from the sale of their shares in the initial public offering (“IPO”).
Then, on February 9, 2015, Fifth Street Finance Corp reported its fiscal results for the quarter ended December 31, 2014 – the same quarter in which defendants conducted the Fifth Street Asset Management IPO.
The plaintiff claims that Fifth Street Finance Corp revealed that, around the time its executives were taking Fifth Street Asset Management 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 and that the Company also revealed that, even though the total assets of Fifth Street Finance Corp’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. The plaintiff claims that despite having announced a 10% dividend increase only four months before taking Fifth Street Asset public, Fifth Street Finance Corp 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.
Shares of Fifth Street Finance Corp. (NASDAQ:FSC) declined from $9.95 per share on July 3, 2015, to as low as $5.52 per share on October 22, 2015.
On November 16, 2015, NASDAQ:FSC shares closed at $6.01 per share.
Those who purchased shares of Fifth Street Finance Corp. (NASDAQ:FSC) have certain options and should contact the Shareholders Foundation.
Shareholders Foundation, Inc.
3111 Camino Del Rio North – Suite 423
92108 San Diego