What's Happening?
Pomerantz LLP has initiated a class action lawsuit against CTO Realty Growth, Inc. and certain of its officers, alleging violations of federal securities laws. The lawsuit, filed in the United States District Court for the Middle District of Florida, targets individuals and entities that acquired CTO securities between February 18, 2021, and June 24, 2025. The complaint accuses CTO of making materially false and misleading statements about its business operations and compliance policies. Specifically, it alleges that CTO's dividends were less sustainable than claimed, and that the company used deceptive practices to inflate its financial metrics, particularly its Adjusted Funds from Operations (AFFO). The lawsuit follows a report by Wolfpack Research, which criticized CTO's financial practices and predicted further financial dilution. Following the report, CTO's stock price fell by 5.42%.
Why It's Important?
This lawsuit highlights significant concerns about the transparency and financial practices of CTO Realty Growth, a publicly traded real estate investment trust. If the allegations are proven, it could lead to substantial financial repercussions for the company and its investors. The case underscores the importance of accurate financial reporting and compliance with securities laws, which are critical for maintaining investor trust and market stability. The outcome of this lawsuit could influence how REITs report their financial health and manage investor relations, potentially leading to stricter regulatory scrutiny and changes in industry practices.
What's Next?
Investors who purchased CTO securities during the specified period have until October 7, 2025, to seek appointment as lead plaintiff in the class action. The court's decision on this matter will determine the direction of the lawsuit. Meanwhile, CTO may face increased pressure to address the allegations and improve its financial transparency. The case could also prompt other investors to scrutinize similar companies for potential misrepresentations, leading to broader industry implications.
