Blue Owl Capital is defending two lawsuits filed in the U.S. District Court for the Southern District of New York: a securities fraud class action accusing the firm of hiding redemption pressure in one of its private credit funds, and a shareholder derivative suit alleging its investment advisory arm collected more than $414 million in excessive fees by inflating the value of the assets it was paid to manage. Both cases were filed between December 2025 and April 2026, and as of mid-2026 Blue Owl has not yet responded to the substance of either complaint.
The Securities Fraud Class Action Over OBDC II
Investor Alexander Goldman sued Blue Owl Capital Inc. on December 3, 2025, alleging violations of Sections 10(b) and 20(a) of the Securities Exchange Act and SEC Rule 10b-5. Goldman v. Blue Owl Capital Inc. (No. 1:25-cv-10047) covers a proposed class of investors who held Blue Owl securities between February 6, 2025, and November 16, 2025.1Kessler Topaz Meltzer & Check, LLP. Blue Owl Capital Inc.
The complaint focuses on Blue Owl Capital Corporation II (OBDC II), a non-traded business development company that promised investors quarterly redemptions at net asset value. According to the lawsuit, Blue Owl told the market there was “no meaningful pressure” on its asset base from redemptions while internal withdrawal requests were climbing sharply. Tender volumes in OBDC II roughly doubled year-over-year in August and September 2025, and about $150 million was withdrawn in the first nine months of the year, a 20 percent jump from the same period in 2024.2Zacks Levi & Korsinsky LLP. Blue Owl Capital Inc. (OWL) Securities Class Action Lawsuit Update
The picture worsened in November 2025, when Blue Owl announced a stock-for-stock merger between OBDC II and the larger, publicly traded Blue Owl Capital Corporation (OBDC). OBDC’s shares were trading at roughly a 20 percent discount to its own net asset value, so the exchange ratio would have effectively locked in a 20 percent paper loss for OBDC II investors. The reaction from the financial press and shareholders was, in Morningstar’s description, an “uproar.”3Morningstar. Blue Owl Offers Harsh Lesson for Semiliquid Fund Investors Blue Owl scrapped the merger days later, citing “market conditions.”4Blue Owl Capital Corporation. Blue Owl Capital Corporation and Blue Owl Capital Corporation II Announce Merger Termination
Then, in February 2026, the company halted quarterly redemptions in OBDC II entirely and shifted the fund to a “drawdown” model, meaning capital would come back over time rather than on demand. On the same day, Blue Owl disclosed that it had sold $1.4 billion in loan assets across three funds, with $600 million of that coming out of OBDC II — roughly one-third of the fund’s net asset value. Investors were told they could expect up to $2.35 per share, about 30 percent of NAV.5White Securities Law. Blue Owl Capital Shareholder Claims OBDC’s publicly traded shares dropped more than 9 percent intraday on the news and closed down 5.9 percent.3Morningstar. Blue Owl Offers Harsh Lesson for Semiliquid Fund Investors Blue Owl’s stock hit a record low of $8.45 on April 6, 2026.6Bloomberg. Blue Owl Stock Closes at a Record Low Amid Private Credit Exodus
Where the Class Action Stands
The lead plaintiff deadline was February 2, 2026. Two competing motions came in that day: one from Goldman, and another from two Canadian pension funds, the Nova Scotia Public Service Superannuation Plan and the Nova Scotia Teachers’ Pension Plan. Briefing wrapped up in late February 2026, but as of the most recent docket activity in March 2026 the court had not yet chosen a lead plaintiff. Blue Owl’s lawyers appeared and secured an indefinite stay of the deadline to respond to the complaint until a lead plaintiff is appointed. No answer or motion to dismiss has been filed.7CourtListener. Goldman v. Blue Owl Capital Inc.
The $414 Million Excessive Fee Derivative Suit
Shareholder Richard Delman filed a derivative action on April 27, 2026, on behalf of Blue Owl Capital Corporation (OBDC) against its investment adviser, Blue Owl Credit Advisors LLC. Delman v. Blue Owl Credit Advisors LLC (No. 7:26-cv-03468) alleges breach of fiduciary duty under Section 36(b) of the Investment Company Act of 1940.8InvestmentNews. Stockholder Sues Blue Owl Adviser, Alleges $414M in Excessive Fees
The theory is a conflict of interest built into the adviser’s dual role. Blue Owl Credit Advisors picks OBDC’s investments and manages the portfolio. It also serves as OBDC’s “valuation designee” under SEC Rule 2a-5, meaning it decides what those investments are worth. Because its fees are calculated off gross and net asset value, the complaint alleges, the adviser has every reason to keep marks high.9D&O Diary. Blue Owl and the Growing D&O and E&O Risks in Private Credit
Under the advisory agreement, Blue Owl Credit Advisors collects a base management fee of 1.5 percent of OBDC’s gross assets (including assets bought with borrowed money) plus incentive fees of 17.5 percent of pre-incentive fee net investment income above a quarterly hurdle rate, and 17.5 percent of cumulative net realized capital gains annually.10U.S. Securities and Exchange Commission. Delman v. Blue Owl Credit Advisors LLC, Verified Derivative Complaint Total fees rose from $282.4 million in 2021 to $414.4 million in 2025, a 47 percent increase; the 2025 figure was $252 million in management fees and $162.4 million in incentive fees. Delman argues those amounts are “so disproportionately large that they bear no relationship to the value of the services provided.”8InvestmentNews. Stockholder Sues Blue Owl Adviser, Alleges $414M in Excessive Fees
Specific Valuation and Fee Allegations
OBDC’s portfolio is dominated by private loans that don’t trade publicly. They are classified as “Level 3” assets, valued using internal models rather than observable prices. The complaint alleges the adviser used that opacity to inflate marks. As one example, OBDC valued its junior preferred stock and second-lien debt in Cornerstone OnDemand, Inc. at roughly 90 cents on the dollar even though the company’s senior debt was recently trading at 78 cents. Similar discrepancies are alleged for loans to Barracuda, Peraton Corp., and Conair Holdings.8InvestmentNews. Stockholder Sues Blue Owl Adviser, Alleges $414M in Excessive Fees
The market appears skeptical of the reported values. OBDC’s stock has traded at a persistent discount to its NAV since at least November 2025. As of mid-June 2026 the gap was about 25 percent: a NAV of $14.41 per share as of March 31, 2026, against a stock price of roughly $10.86.11Blue Owl Capital Corporation. Investors
The complaint also challenges OBDC’s reported sector exposure. Blue Owl states that 11.1 percent of the portfolio sits in “Internet Software & Services,” but Delman alleges non-standard internal classifications hide true economic exposure closer to 20 to 30 percent. The complaint cites an April 2026 Morgan Stanley report projecting 8 percent default rates for software-sector private credit loans through mid-2027, tied in part to concerns that artificial intelligence could weaken the business models of many software companies.10U.S. Securities and Exchange Commission. Delman v. Blue Owl Credit Advisors LLC, Verified Derivative Complaint
A separate allegation targets payment-in-kind, or PIK, interest. Some OBDC borrowers pay interest by adding it to their loan balance rather than sending cash, and the adviser counts that accrued-but-unreceived income when calculating its fees. About $26 million of the 2025 management fee was tied to PIK income. OBDC’s advisory agreement has no clawback provision, so if a borrower defaults and the PIK is never paid, the adviser keeps what it collected. The complaint says roughly half of the 43 publicly traded BDCs analyzed in the filing do have clawback protections.8InvestmentNews. Stockholder Sues Blue Owl Adviser, Alleges $414M in Excessive Fees
Where the Derivative Suit Stands
The complaint asks for recovery of the excessive fees and rescission of the entire investment advisory agreement under Section 47(b) of the Investment Company Act. As of early May 2026, Blue Owl Credit Advisors had not filed an answer or motion to dismiss, and no scheduling orders had been issued.12O’Melveny & Myers LLP. Scrutiny in Private Credit Is Expanding, Creating New Litigation Risks for BDCs, Credit Managers, and Retail Distribution Channels
Why Section 36(b) Cases Are Hard to Win
Excessive fee claims under Section 36(b) rarely succeed at trial. The controlling standard from the Supreme Court’s 2010 decision in Jones v. Harris Associates, which adopted the Second Circuit’s 1982 test in Gartenberg v. Merrill Lynch Asset Management, requires the plaintiff to show the fee is “so disproportionately large that it bears no reasonable relationship to the services rendered and could not have been the product of arm’s length bargaining.” Courts weigh the nature and quality of the adviser’s services, the profitability of the fund to the adviser, whether economies of scale reached investors, and how carefully the fund’s independent directors reviewed the arrangement. When a well-informed independent board has done a rigorous review, its approval gets “considerable weight.”13Justia. Jones v. Harris Associates L.P., 559 U.S. 335 The plaintiff carries the burden, and historically few Section 36(b) suits have won.14ICI Mutual. Section 36(b) Litigation Overview
What sets the Delman case apart is that the defendant is a BDC adviser rather than a mutual fund manager. The structural conflict at the heart of the claim, an adviser that both manages and prices illiquid assets while earning fees off those prices, is sharper than in a typical mutual fund dispute where portfolio holdings have observable market values.
Wider Fallout for Private Credit
Legal analysts have flagged the Blue Owl cases as a bellwether for private credit. Opaque valuations, fees tied to those valuations, and a rapidly growing retail investor base in vehicles like BDCs together create what one commentary described as converging directors-and-officers and errors-and-omissions insurance risk.9D&O Diary. Blue Owl and the Growing D&O and E&O Risks in Private Credit The SEC has said private fund valuation practices are an examination priority for 2026 and has already settled enforcement actions against at least one manager for selling loans at par without a fair-value analysis.15Quinn Emanuel Urquhart & Sullivan LLP. Private Credit Under Stress: Emerging Litigation Risks Several class actions against other BDCs alleging inflated NAV and delayed loss recognition were filed in early 2026.16Freshfields. Private Capital Courts Mom and Pop: Managing the Risks of Retailization in Private Capital No regulatory investigation specifically targeting Blue Owl has been publicly disclosed.