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Colony Capital, Inc. Class Action Lawsuit

Case Summary

Company Name
Colony Capital, Inc.
Stock Symbol
CLNY
Class Period
August 9, 2019 to May 7, 2020
Court
Central District of California

The Colony Capital, Inc. class action lawsuit charges Colony Capital and certain of its officers with violations of the Securities Exchange Act of 1934 and seeks to represent purchasers of Colony Capital’s securities between August 9, 2019 and May 7, 2020 (the “Class Period”).  The Colony Capital class action lawsuit was commenced on May 26, 2020 in the Central District of California and is captioned Swartzendruber v. Colony Capital, Inc., No. 20-cv-04673.

Colony Capital is a leading global investment management firm with assets under management of $55 billion.  Colony Capital manages capital on behalf of its stockholders, as well as institutional and retail investors in private funds, and traded and non-traded real estate investment trusts.

The Colony Capital class action lawsuit alleges that defendants made false and/or misleading statements and/or failed to disclose that: (i) Colony Capital’s sale of its industrial real estate portfolio and the bifurcation of Colony Credit Real Estate Inc.’s portfolio were foreseeably likely to negatively impact Colony Capital’s financial and operating results; (ii) certain of Colony Capital’s remaining portfolio companies carried unsustainable levels of debt secured by hotels and healthcare-related properties and were thus at a significant risk of default; and (iii) as a result, Colony Capital’s public statements were materially false and misleading at all relevant times.

On November 8, 2019, Colony Capital reported a GAAP net loss of $555 million, or ($1.15) per share, which “notably included reductions of goodwill, real estate and provision for loan losses totaling $540.3 million . . . of which $387.0 million was attributable to the reduction of goodwill primarily as a result of the pending sale of [Colony Capital’s] industrial investment management business and related real estate portfolio, and the decrease in management fees from Colony Credit Real Estate, Inc. resulting from impairments related to its portfolio bifurcation.”  On this news, Colony Capital’s stock price fell nearly 9%.

Then, on May 8, 2020, Colony Capital reported that its portfolio companies had defaulted on $3.2 billion of debt secured by hotels and healthcare-related properties and that Colony Capital had received a notice of acceleration covering $780 million of the defaulted debt.  On this news, Colony Capital’s stock price fell an additional 3.81%.

Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities class action litigation.  With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history.  For seven consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements.  Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims.  Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide.  Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry.

Class Period: August 9, 2019 - May 7, 2020
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