BlackRock TCP and the spotlight on BDCs
BlackRock TCP and the spotlight on BDCs
This new shareholder class action suit was filed in the U.S. District Court for the Central District of California against BlackRock TCP Capital Corp. (“BlackRock TCP”) for allegedly misleading investors by understating their losses and publicly issuing false and/or misleading statements about their portfolio. The class period is between November 6, 2024, and January 23, 2026.[1]
BlackRock TCP Capital Corp. is an “externally managed specialty finance company focused on middle-market lending,” according to their website.[2] BlackRock TCP is considered a business development company (“BDC”) “…which raises funds from investors and then uses those funds to make loans to small and midsize businesses as an alternative to bank financing.”[3] Essentially, a BDC invests in “middle-market” companies and is considered a niche part of the market that “may provide alternative opportunities to access attractive income streams.”[4] For example, traditional lenders like banks may not be able to lend to such “middle-market” companies, but BDCs can provide such essential financing.
The SEC’s Office of Investor Education and Assistance issued more information about BDCs in 2024 to provide investors with useful information about publicly traded BDCs. The SEC emphasizes, “BDCs are not registered with the SEC as investment companies. However, BDCs are subject to any protective provisions of the Investment Company Act, such as governance requirements, compliance and recordkeeping provisions, and prohibitions on certain conflicts of interest.”[5]
According to the complaint, on February 27, 2025, BlackRock TCP issued a press release which disclosed that the “…portfolio had significantly weakened during the 2024 fiscal year.” However, BlackRock TCP told investors in 2024 that the portfolio was showing “signs of improvement,” which was materially untrue.[6]
As a result, the stock price fell over 9%, but BlackRock TCP was adamant in their press release that “the vast majority of [BlackRock TCP’s] portfolio continued to perform well.”[7]
[1] Complaint at ¶1, Burnell v. BlackRock TCP Capital Corp., No. 2:26:-cv-01102 (C.D. Cal. February 3, 2026)
[2] https://www.tcpcapital.com/
[3] Complaint at ¶2, Burnell v. BlackRock TCP Capital Corp., No. 2:26:-cv-01102 (C.D. Cal. February 3, 2026)
[4] Guggenheim Investments, Income Opportunity in the Middle Market: An Overview of Business Development Companies, available at https://www.guggenheiminvestments.com.
[5] “Publicly Traded Business Development Companies (BDCs): Investor Bulletin,” SEC’s Office of Investor Education and Assistance, see https://www.investor.gov/introduction-investing/general-resources/news-alerts/alerts-bulletins/investor-bulletins/publicly-traded-business-development-companies-bdcs-investor-bulletin
[6] Jessica Corso, “BlackRock Arm Faces Investor Suit Over Lending Losses,” https://www.law360.com/articles/2438552/blackrock-arm-faces-investor-suit-over-lending-losses
[7] Complaint at ¶6, Burnell v. BlackRock TCP Capital Corp., No. 2:26:-cv-01102 (C.D. Cal. February 3, 2026)
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Ellen Lee is an associate in the New York office of Faruqi & Faruqi LLP and focuses her practice on securities litigation. She is currently awaiting admission in New York.
