The legal action, led by the firm Hagens Berman, represents investors who held CCB stock between October 28, 2024, and July 29, 2026. Plaintiffs contend that despite repeated public assurances regarding disciplined underwriting and effective risk management, the company failed to disclose that a major partner portfolio—comprising roughly $500 million in loans—had significantly deteriorated.

The reality of these internal failures surfaced on July 30, 2026, when the company posted a $42.1 million net loss. The damage was primarily driven by $68.8 million in pre-tax charges linked to a single CCBX partner. Investors reacted sharply, sending shares plummeting from $70.66 to $39.91. Reed Kathrein, the partner leading the investigation, is now scrutinizing when exactly the bank identified these issues and whether executives knowingly provided false comfort to the market. With the CFO departing alongside these disclosures, the firm is currently soliciting information from whistleblowers familiar with Coastal's internal credit controls.