Key Takeaways
The Schall Law Firm announced it is investigating Blue Owl Credit Income Corp. (OCIC) for securities law violations, following a 95 percent plunge in the fund’s new investments.
The investigation focuses on whether the company "issued false and/or misleading statements and/or failed to disclose information pertinent to investors," the law firm said in a statement on May 13.
The probe comes after Blue Owl's May 1 regulatory filing showed its OCIC fund accepted just $26.4 million in new subscriptions, a steep decline from $480 million a year prior. In its recent earnings report, Blue Owl also reset its quarterly dividend to $0.31 per share from a higher prior level and reported a net asset value decline to $14.41 per share from $14.81 in the previous quarter.
The investigation adds legal pressure to the $34 billion fund, which is already navigating investor concerns about private credit and a slowdown in deal activity. Blue Owl's management maintains its underlying credit portfolio is stable, attributing the NAV decline primarily to broader market spread widening rather than asset quality deterioration.
In a recent earnings call, Blue Owl CEO Craig Packer described the first quarter as "more challenging" due to lower base rates and tighter spreads. The company noted that non-accruals declined to 1.0% of the portfolio at fair value and that it repurchased $35 million of its stock during the quarter.
The fraud investigation could lead to a class-action lawsuit, adding financial and reputational risk on top of the market headwinds Blue Owl faces. Investors will be watching for the outcome of the Schall Law Firm's probe and any response from the U.S. Securities and Exchange Commission.
This article is for informational purposes only and does not constitute investment advice.
