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Authored by: Samuel Martin
Oftentimes, the most damaging piece of evidence in a securities case is the words of the defendant. In the case of Blue Owl Capital, that evidence came in the phrase “no meaningful pressure.” That phrase, or iterations of it, were repeated across SEC filings, investor presentations, and quarterly earnings calls throughout 2025. Plaintiffs allege Blue Owl was sitting on information that contradicted these words. In December of 2025, a securities class action titled Goldman v. Blue Owl Capital Inc., et al., Case No. 1:25-cv-10047, was filed in the Southern District of New York on behalf of investors who claim they were misled regarding the health of one of the company’s credit funds.[1] The importance of the case lies not only in what happened, but also in what this could mean for future securities litigation.
Setting the Stage
Blue Owl Capital is a publicly traded investment firm managing over $250 billion in assets.[2] A sizeable portion of those assets sits in non-traded business development companies, or BDCs – closed-end funds that lend to mid-sized private companies and are sold to retail investors. Of those funds, OBDC II had for seven years run a quarterly tender offer program, in which each quarter the fund would repurchase shares at net asset value, subject to a cap and prorated if investors asked for more.[3] This was never a right to withdraw on demand, but the expectation by investors that the window would continue to open. This exit option was an essential piece of the fund that gave investors flexibility with their money.
The complaint alleges that throughout 2025, investors began exiting the fund at a quickened pace. Over the first nine months, nearly $150 million was withdrawn, up ~20% from the same period in 2024.[4] Blue Owl, however, continued to reassure investors that the fund was operating as normal and they had nothing to worry about.[5]
What Actually Happened
Things fell apart in a matter of weeks. In October of 2025, Blue Owl’s quarterly earnings missed analyst expectations and the stock fell accordingly, approximately 4%.[6] Management, according to the complaint, continued to comfort investors and claim the fund was stable.[7]
On November 5 of 2025, Blue Owl announced a merger between OBDC II and a sister fund. Within that announcement, Blue Owl disclosed that the withdrawal window that allowed investors to remove money from the fund would be suspended until the merger was complete.[8] The stock continued to fall.[9] Additionally, the structure of the pending merger meant investors in the OBDC II fund were now being forced into an exchange in which they were losing money.[10]
Finally, on November 16, a Financial Times article detailed the effect the merger would have on OBDC II investors. In that article, a Blue Owl executive admitted that the fund may have to halt withdrawals entirely without the merger.[11] The stock again fell.[12] On November 19, Blue Owl cancelled the proposed merger. [13]
Effect on Litigators
This case is about a company and leadership team that allegedly continued to tell investors that everything was fine, when in reality the situation within one of its premier funds was getting worse. That scenario is one that is repeated throughout most securities fraud litigation.
The complaint’s strategy to prove Blue Owl executives knew what they were doing is certainly worth viewing.[14] Plaintiff’s counsel does not rely on any single piece of evidence, rather, they build their argument around the oversight responsibilities and knowledge of the company’s top executives.[15] Executives had access to data showing what was happening regarding investor withdrawals and had signed disclosure statements given to the public. The gap between what they knew and what they were telling the public is the focal point of plaintiff’s argument. Second Circuit courts have held that access to bad information alone is not enough, and plaintiffs must show the executives were either aware the statements were false or were reckless in not knowing.[16] If the facts are as alleged, this should not be a difficult task.
Plaintiff’s strategy focuses on tying investor losses to three separate events rather than any single one, allowing them to argue Blue Owl’s alleged cover-up happened over time. The defense will argue that falling stock prices or a complex merger announcement do not reveal any sort of fraud. The Court’s analysis of this question and where that line is drawn will play a role in future securities fraud claims that revolve around private funds’ poor performance.
The defense also has an argument that the language issue is vague, corporate language that courts generally are hesitant to rule as fraud.[17] If this argument is successful, future defendants are being handed a roadmap on how to write disclosure statements for private funds that do not impose liability on executives who sign off on them. If the argument fails, it sends a signal that assurances about the health of a non-traded BDC do carry some degree of legal weight.
Beyond Blue Owl
Private investment funds have grown quickly in both size and volume over the past decade, and more and more investors have money in them, whether through retirement accounts, brokerage accounts, or other investment vehicles. These products draw in investment through the promise of steady returns and access to your money. When that access is revoked without proper warning, as was the case for OBDC II, people are harmed.
Courts will have to answer the question of, when a company’s private fund begins to show signs of stress, at what point is the company required to disclose that information to the public? The Southern District of New York, a court with significant influence in the world of securities law, will have to answer this question in the case. The judge’s decision on whether the motion to dismiss is specific enough to survive the strict pleading requirement of the PSLRA will be the first hurdle for plaintiffs to get through.[18]
If the case moves forward, the court will have an even bigger question to decide: When a company makes misleading public statements about a private fund, are investors permitted to sue for the losses taken on the company’s stock? This question has not been answered yet in addressing private funds. If allowed, investment firms now know disclosures made regarding their funds are subject to real legal consequences. If not, future investor challenges will have a difficult time finding relief in court.
Conclusion
Goldman v. Blue Owl Capital is a case about a company telling investors one story while something else entirely was going on behind the scenes. The complexity of OBDC II and the proposed merger makes this case more complicated, but the underlying issue is seen throughout securities litigation. Did the executives know? Were investors relying on the information given to them?[19] Did the misleading information lead to real losses? Non-traded BDC redemption disclosures have not been tested much in securities fraud litigation. This case may change that.
[1] Complaint at ¶ 1, Goldman v. Blue Owl Capital Inc., No. 1:25-cv-10047 (S.D.N.Y. Dec. 3, 2025) [hereinafter Complaint]; Securities Exchange Act of 1934, § 10(b).
[2] Id. at ¶¶ 2-5.
[3] Id. at ¶¶ 19-21.
[4] Id. at ¶¶ 48-52.
[5] Id. at ¶¶ 53-58.
[6] Blue Owl Capital Inc., Quarterly Report (Form 10-Q) (Oct. 30, 2025); Complaint, supra note 1, at ¶¶ 58-63.
[7] Complaint, supra note 1, at ¶¶ 61-63
[8] Id. at ¶ 67; See also Blue Owl Capital Inc., Current Report (Form 8-K) (Nov. 5, 2025).
[9] Complaint, supra note 1, at ¶ 70.
[10] Id. at ¶¶71-75.
[11] Sujeet Indap, Blue Owl Private Credit Fund Merger Leaves Some Investors Facing 20% Hit, FIN. TIMES (Nov. 16, 2025), https://ft.com; Complaint, supra note 1, at ¶¶ 76-80.
[12] Complaint, supra note 1, at ¶ 80.
[13] Id. at ¶ 82.
[14] Id. at ¶¶ 95-106.
[15] Id. at ¶¶14-16, 95-101.
[16] Novak v. Kasaks, 216 F.3d 300, 308-09 (2d Cir. 2000).
[17] Fait v. Regions Fin. Corp., 655 F.3d 105, 110-13 (2d Cir. 2011).
[18] Private Securities Litigation Reform Act of 1995, Pub. L. No. 104-67, 109 Stat. 737.
[19] Basic Inc. v. Levison, 485 U.S. 224, 247 (1988).