FBRT Investors Allege Executives Concealed Dividend Sustainability

Lawsuit claims CEO, CFO, and President misled shareholders about dividend coverage and REO liquidation timelines

Apr. 13, 2026 at 6:59pm

Got story updates? Submit your updates here. ›

A high-contrast black and white close-up of intricate gears, levers, and other heavy industrial machinery, representing the complex financial infrastructure underlying corporate reporting and investor relations.An extreme close-up of the complex inner workings of the financial industry exposes the tangible mechanisms behind corporate disclosures and investor trust.NYC Today

A securities class action lawsuit has been filed against Franklin BSP Realty Trust, Inc. (FBRT) and three of its senior executives, alleging they concealed information about the sustainability of the company's $0.355 per share dividend. The lawsuit claims the CEO, CFO, and President made false statements about FBRT's dividend coverage and the timeline for resolving underperforming real estate owned (REO) investments, leading to a 14% stock price drop when the company announced a dividend cut in February 2026.

Why it matters

The case highlights the responsibility of corporate executives to ensure their public statements about a company's financial health are accurate and complete. Investors rely on these disclosures, and allegations that senior leaders personally certified inaccurate information could lead to significant liability under securities laws.

The details

The lawsuit alleges that FBRT's CEO Richard J. Byrne, CFO Jerome S. Baglien, and President Michael Comparato made misleading statements about the company's dividend sustainability and REO resolution timelines between November 2024 and February 2026. The complaint claims the executives knew or recklessly disregarded that FBRT's distributable earnings were only $0.27 per share as of Q2 2025, yet they continued affirming the $0.355 dividend. It also alleges the executives misled investors about the pace of REO liquidations, which Comparato later disclosed were 'taking longer than originally anticipated'.

  • On February 12, 2026, FBRT's stock price fell $1.44 per share, or 14.18%, after the company announced a dividend cut from $0.355 to $0.20 per share.
  • Investors have until April 27, 2026 to file to be considered as lead plaintiff in the class action lawsuit.

The players

Richard J. Byrne

Served as Chief Executive Officer until February 10, 2026, and as Chairman of the Board of Directors at all relevant times. The complaint alleges he directly participated in company management and was privy to confidential information about FBRT's dividend sustainability.

Jerome S. Baglien

Served as Chief Financial Officer, Chief Operating Officer, and Treasurer throughout the Class Period. The lawsuit claims he was directly involved in drafting and disseminating the allegedly misleading statements about dividend coverage.

Michael Comparato

Served as President until February 10, 2026, when he replaced Byrne as CEO. The action alleges he ultimately disclosed on February 12, 2026 that REO liquidations had taken 'longer than originally anticipated, keeping equity locked in underperforming investments.'

Got photos? Submit your photos here. ›

What they’re saying

“Corporate officers have a duty to ensure their companies' public statements are accurate and complete. When senior executives personally certify financial statements while allegedly aware that core representations about dividend sustainability lack support, investors deserve accountability.”

— Joseph E. Levi, Attorney, Levi & Korsinsky, LLP

What’s next

The judge will decide by April 27, 2026 whether to allow the case to proceed as a class action lawsuit on behalf of all affected FBRT investors.

The takeaway

This case highlights the importance of corporate transparency and the legal obligations of senior executives to ensure their public disclosures are truthful. Investors will be closely watching to see if the allegations of misleading statements about FBRT's dividend sustainability lead to significant liability for the named executives.