Investigation Alert: PennyMac

Overview

Dilworth Paxson brought a class action against PennyMac for alleged violations of federal law on behalf of a proposed class of investors.

PennyMac’s fixed-to-floating rate Series A (PMT-A) and B (PMT-B) Preferred Shares (“Preferred Shares”) were issued initially to have a fixed rate dividend, set to transition later to a floating rate based on the three-month London Interbank Offered Rate (“LIBOR”).  LIBOR was a key benchmark interest rate between major global banks. LIBOR ceased publication in 2023, and the federal government enacted the LIBOR Act and the LIBOR Rule mandating that parties replace LIBOR with the Secured Overnight Financing Rate (SOFR) benchmark in legacy contracts that have no adequate fallback provision. Despite having no adequate fallback provisions, Pennymac announced that instead of transitioning the Preferred Shares to SOFR it would instead replace the LIBOR-based benchmark with the initial fixed rate, effectively converting a floating-rate note into a fixed-rate note. As a result, investor have been injured by a decline in the value of their investment and loss of dividend income.

If you own PennyMac Series A or B Preferred Shares and would like to learn more about our case, contact Catherine Pratsinakis at cpratsinakis@dilworthlaw.com, or 215-575-7013.

The services addressed will be rendered principally by attorneys based in our Philadelphia, PA office