Coastal Financial Faces Class Action Lawsuit Following 43% Stock Plunge
A 43% single-day collapse in Coastal Financial Corporation shares has triggered a securities class action lawsuit, alleging the firm misled investors about the stability of its Banking-as-a-Service credit portfolio. The litigation centers on claims that the company failed to disclose material deterioration in a $500 million loan segment.
The lawsuit, filed by Hagens Berman, targets the period between October 28, 2024, and July 29, 2026. During this timeframe, Coastal Financial repeatedly assured shareholders that its CCBX segment maintained disciplined growth and robust risk management infrastructure. The complaint alleges these statements masked significant vulnerabilities, specifically regarding a partner portfolio that accounted for nearly 23% of all CCBX loans.
The market reality surfaced on July 30, 2026, when the firm reported a $42.1 million net loss. This shortfall was driven by $68.8 million in pre-tax charges linked to a single partner relationship, including a $46 million valuation adjustment. The disclosure, compounded by the unexpected departure of the company’s CFO, caused shares to crater from $70.66 to $39.91 in one session.
Reed Kathrein, the partner leading the investigation, stated that the firm is scrutinizing exactly when Coastal identified the partner-related issues and whether internal controls were fundamentally misrepresented to the public. Investors who suffered losses have until December 1, 2026, to serve as lead plaintiffs, while the firm continues to solicit information from whistleblowers familiar with the company’s internal underwriting practices.
Comments (0)
No comments yet. Be the first!