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Pomerantz Law Firm Investigates Claims On Behalf Of Rocket Company Investors

Katie Jensen
Jul 01, 2021

Pomerantz Law Firm will be investigating claims concerning whether Rocket and certain of its officers and/or directors engaged in security fraud or unlawful business practices.

Pomerantz Law Firm will be investigating claims on behalf of Rocket Company, Inc. investors, concerning whether Rocket and certain of its officers and/or directors engaged in security fraud or unlawful business practices. 

On May 5, 2021, Rocket announced its first quarter 2021 results and second quarter outlook. At the time, Rocket was on track to achieve a closed loan volume between only $82.5 billion and $87.5 billion. The gain on sales margin was projected to be between only 2.65% to 2.95% in the second quarter of 2021. However, at the midpoint, the gain on sales margin declined 239 basis points since last year and declined 94 basis points sequentially. This represents Rocket’s lowest quarterly gain on sales margin in two years. 

Rocket's chief financial officer and treasurer, Julie R. Booth, stated that the sharp decline in gain on sales margin was being caused by three main factors: (i) pressure on loan pricing, (ii) a product mix shift to Rocket’s lower margin Partner Network segment, and (iii) a compression in price spreads between primary and secondary mortgage markets. Booth also admitted that the downward trends began at the end of the first quarter, right before the sale of $500 million worth of Rocket stock by Company insiders.

Rocket's stock price fell $3.79 per share (-16.62%) to close at $19.01 per share on May 6, 2021. Rocket Companies include Rocket Mortgage, Rocket Loans, Rocket Auto, Rocket Innovation Studios, and more. 

For more information about the Pomerantz Law Firm and previous cases in which they represented defrauded investors, visit https://pomlaw.com/the-firm

Update (07/01): The Rocket Companies class-action lawsuit alleges that defendants made false and misleading statements, failing to disclose that (i) Rocket Companies gain on sale margins were contracting at the highest rate in two years, (ii) Rocket Companies were engaged in price wars and battle for market share, and (iii) the before mentioned trends accelerated, causing Rocket’s gain on sale margin to plummet at least 140 basis points in the first six months of 2021. 

As a result, Rocket Companies' historically high gain on sale margin vanished, falling below pre-pandemic levels. Therefore, investors claim the defendants' positive statements about Rocket Companies’ operations and prospects were misleading.

More information on the Rocket Company class-action lawsuit can be found here.

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