Stockholder Claims Triangle Capital Hid Poor Performance Behind False Assurances

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Triangle Capital Corporation and three top executives are facing a proposed class action lawsuit that accuses the parties of publishing “materially false and misleading statements” regarding the company’s financial outlook. The suit attests that between May 7, 2014 and November 1, 2017, the defendants assured stockholders that Triangle – a private equity firm that focuses on lending to small- to mid-size private companies – had made sound investments and was poised for success.

What the defendants failed to reveal, the complaint argues, was that the company’s CEO had ignored investment advisors and chosen to pursue risky mezzanine loan deals with “higher short-term yield” that eventually resulted in many of Triangle’s investments falling into “substantial risk of non-accrual.” Even further, the suit claims the defendants attempted to hide the company’s negative performance by understating the number of poorly performing loans and deferring loss recognition.

According to the complaint, the truth was eventually revealed in Triangle’s November 2017 press release in which the company announced significantly negative third-quarter financial results.

“Most shocking,” the suit explains, “Triangle revealed that it had placed seven new investments on nonaccrual status during the quarter, effectively acknowledging that those assets were unlikely to generate future returns, and that the amount of investments on non-accrual had ballooned to 13.4% and 4.7% of the Company’s total portfolio at cost and at fair value, respectively.”

Upon this news, Triangle’s stock prices allegedly fell 20.98 percent, injuring stockholders who the plaintiff says relied on the defendants’ supposedly false representations and purchased shares at inflated prices.