Houston, TX, October 17, 2015 --(PR.com
)-- Emerson Scott, LLP announces that it has filed a class action lawsuit in the United States District Court for the District of Connecticut, Waters-Cottrell v. Fifth Street Finance Corp., et al., Civil Action No. 3:15-cv-01488, on behalf of purchasers of common stock of Fifth Street Finance Corp. (“FSC” or the “Company”) during the period from July 7, 2014 through and including February 6, 2015 (the “Class Period”).
FSC is a specialty finance company managed by Fifth Street Asset Management, Inc. (“FSAM”) that lends to and invests in small and mid-sized companies, primarily in connection with investments by private equity sponsors. The complaint alleges that FSC, FSAM and certain officers and directors of both companies violated Sections 10(b) and 20(a) of the Securities Exchange Act of 1934. The complaint alleges that during the Class Period, defendants engaged in a fraudulent scheme to artificially inflate FSC’s assets and investment income in order to increase FSAM’s revenue in advance of an initial public offering by FSAM. Defendants are alleged to have pushed FSC into increasingly risky, speculative investments at unsustainable leverage levels and delayed writing down impaired investments in order to create the appearance of increased revenues for FSAM.
On February 9, 2015, shortly after FSAM’s IPO, allegedly, FSC reported its results for the quarter ended December 31, 2014, revealing that it had moved $106 million of investments to non-accrual status and that an additional $17 million was likely to be designated as non-accrual in the following quarter. The Company further allegedly revealed that even though the total assets of FSC’s investment portfolio had continued to increase to almost $3 billion by the quarter end (a 42% increase from the end of fiscal 2013), net investment income declined by 6% compared to the prior quarter. The Company allegedly announced that it would not issue a dividend for February 2015, after having announced a 10% dividend increase several months earlier. Allegedly, on this news, the price of FSC common stock fell by $1.27 per share to close at $7.22 per share, a decline of nearly 15%.
Plaintiff seeks to recover damages on behalf of all purchasers of common stock of FSC during the Class Period. The plaintiff is represented by the Houston-based firm of Emerson Scott, LLP with offices in Houston, Texas and Little Rock, Arkansas. Emerson Scott, LLP and its predecessor firms have devoted their practice to shareholder class actions and complex commercial litigation for more than thirty years and have recovered hundreds of millions of dollars for shareholders in class actions throughout the United States.
If you wish to serve as lead plaintiff, you must move the Court no later than November 30, 2015. To discuss your rights regarding the appointment of lead plaintiff and for additional information about your interest in this class action, please contact plaintiff’s counsel, Emerson Scott, LLP, at the following toll-free number: 800-663-9817 free, or via e-mail to John G. Emerson (firstname.lastname@example.org
) or David G. Scott (email@example.com
). A copy of the complaint is available from the Court or from Emerson Scott, LLP.