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Activist short seller Hindenburg Research has taken aim at Axos Financial (NYSE: AX), alleging the San Diego-based regional bank has concealed known risks about its lending practices and the health of its loan portfolio.

Known for its investigative reports uncovering corporate fraud and malfeasance, Hindenburg released a detailed analysis contending that Axos has been aggressively increasing its exposure to commercial real estate (CRE) loans, a sector that has been struggling since the COVID-19 pandemic. While many banks have reduced their CRE exposure, Axos has doubled down, with CRE loans now making up over half of its total loan portfolio. This flies in the face of industry trends, with a 2023 Moody's study finding that regional banks' average exposure to CRE is only 16.5.

Hindenburg’s report also raises concerns about Axos’ underwriting standards.  According to interviews with former employees, the bank may have been willing to lend to borrowers who were rejected by other banks, including those with criminal histories and troubled finances.  These lax standards could lead to a significant number of defaults down the line.

Furthermore, the report highlights potential issues with Axos’ accounting practices.  Axos’ strong credit metrics may not be an accurate reflection of reality. Loan-to-value ratios appear lower than industry averages, and non-performing loan rates seem suspiciously stable. The report suggests that Axos may be manipulating these figures to present a more optimistic picture to investors.


What is the AX investigation about?

We are investigating whether Axos may have mislead investors about its loan portfolio.


I worked at AX. What should I do?

If you were an employee of AX, you may have valuable information that could be relevant to the investigation. Hagens Berman is one of the nation’s top whistleblower law firms, and has successfully represented many individuals who come forward with information regarding corporate malfeasance. Under the new SEC Whistleblower program, whistleblowers who provide original information may receive rewards totaling up to 30 percent of any successful recovery made by the SEC. For more information, contact Reed Kathrein at 844-916-0895 or [email protected].

There are multiple law firms participating, do I need to contact all of them?

No, you do not need to contact all participating law firms. Generally, class-action investigations and lawsuits are consolidated into a single case to streamline the legal process, and attorneys from only a few law firms are selected to serve in a leadership role on the consolidated case. Hagens Berman has a proven track record of being appointed to leadership roles in complex, multidistrict litigation regarding investor fraud and other consumer rights issues, and your claim will be handled by attorneys who have helped secure approximately $325 billion in class-action settlements on behalf of individuals who have suffered due to corporate malfeasance and the wrongdoing of other powerful institutions.


What is the threshold amount to be eligible? What are “substantial” losses?

The threshold amount and the definition of "substantial" losses may vary depending on a number of factors specific to the case, including the size of the company, market cap, shares outstanding and who holds them and the damages alleged by the fraud. In general, to be eligible to participate in a class-action lawsuit, you must be able to demonstrate that you suffered financial losses as a result of the alleged wrongdoing and that your losses meet the criteria set by the court or law firm. Fill out the form and submit your losses.


Am I affected? What do I need to do to participate?

If you were an investor in AX, you may be affected and eligible to participate in the case. To determine your eligibility and potential involvement, fill out the form and submit your losses.

Can any AX investor participate?

In most class-action investigations and cases, any investor who meets the eligibility criteria, including purchasing the shares during the relevant period, can participate, regardless of the size of their investment. Fill out the form to find out your rights.

I bought on a non-U.S. Exchange. Can I participate?

No. This investigation only covers shares bought on a U.S. exchange, i.e. NASDAQ or NYSE. Fill out the form to find out your rights.

Am I included if I still hold my shares, or do I need to sell to participate?

Participation is based on purchasing shares during the relevant period, rather than your current holdings. Accordingly, you do not need to sell to participate. Fill out the form to find out your rights.

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