A shareholder of Two Harbors Investment Corp. filed a federal lawsuit on Feb. 4 seeking to block the real estate investment trust’s proposed acquisition by United Wholesale Mortgage (UWM), alleging that the deal’s registration statement omitted critical information regarding executive stock sales and financial adviser conflicts of interest.
The complaint, filed in the U.S. District Court for the Northern District of Illinois by plaintiff Michael Koblentz, accuses the Two Harbors board of directors of violating the Securities Exchange Act of 1934.
The plaintiff alleges that the proxy statement filed with the Securities and Exchange Commission on Jan. 30 fails to disclose whether the timing of the merger was influenced by executives’ desire to maximize profits through personal stock sales, claiming it lacks necessary transparency regarding the financial fairness opinion rendered by Houlihan Lokey, an advisory firm retained by the Two Harbors board.
A central allegation in the lawsuit involves the timing of the merger announcement relative to stock transactions made by Two Harbors executives. Two Harbors and UWM announced the definitive merger agreement on Dec. 17, 2025. According to the complaint, Two Harbors CEO William Greenberg and four other senior officers exercised options and made non-open market purchases of company stock on Dec. 17 and Dec. 18.
The plaintiff alleges that on Dec. 19 — two days after the merger news broke — Greenberg and the other officers sold shares pursuant to the company’s Rule 10b5-1 plan. The filing questions whether the “timing of both the execution of the Merger Agreement and the announcement of the Proposed Transaction may have been influenced by Defendant Greenberg and other executives’ desire to maximize their profits.”
It also argues that shareholders are entitled to know if the board considered these prescheduled trading plans when determining when to sign and announce the deal.
The complaint also challenges the transparency surrounding the financial advisers guiding the deal. While Houlihan Lokey provided a fairness opinion for the transaction, the complaint alleges the registration statement fails to adequately disclose the specific services Houlihan Lokey provided to Two Harbors in the two years prior, for which it received approximately $2.5 million in aggregate compensation, according to the complaint.
The plaintiff also asserts that Two Harbors used a different, unnamed financial adviser when negotiations began with UWM in December 2024.
According to the filings, this unnamed adviser played a significant role in early deliberations but was replaced by Houlihan Lokey in February 2025. The lawsuit maintains that the proxy statement’s failure to identify this original adviser, or disclose the fees paid to them, prevents shareholders from accessing potential conflicts or misallocated resources.
The plaintiff further alleges that the financial projections used to justify the deal are materially misleading. Specifically, the plaintiff argues that Houlihan Lokey’s analysis utilized “tangible book value per share” multiples but failed to disclose the intangible assets.
The lawsuit also asserts that the proxy omits the underlying data for UWM’s 2028 earnings per share projections, which were used to calculate implied valuations for the buyer.
The plaintiff is seeking a preliminary injunction to prevent the shareholder vote from proceeding until Two Harbors issues curative disclosures addressing the alleged omissions.
Both Two Harbors and UWM did not immediately respond to requests for comment.
UWM and Two Harbors announced in December that the wholesale mortgage giant had agreed to acquire Two Harbors in an all-stock transaction valued at $1.3 billion. Two Harbors is the owner of RoundPoint Mortgage Servicing.
If the transaction ends up being approved by regulators and shareholders, it would make UWM the eighth-largest mortgage servicer in the U.S., according to a joint press release from the companies.
