The Sunlight Financial lawsuit most investors ask about is the securities fraud class action filed in December 2022 after the company disclosed a $30 million-plus impairment charge and its stock lost more than half its value in a day. That case settled for $3.5 million in 2024, and the settlement funds have been distributed. A follow-on securities suit against Sunlight’s lending partner, Cross River Bank, was dismissed in April 2026. Separately, state attorneys general and individual borrowers have pursued consumer protection claims tied to Sunlight’s solar loans, and at least one of those cases remains active.
What Triggered the Securities Case
Sunlight Financial Holdings Inc. went public in July 2021 through a merger with Spartan Acquisition Corp. II, a SPAC sponsored by an affiliate of Apollo Global Management. The combined entity was valued at roughly $1.3 billion and traded on the NYSE under the ticker SUNL.1Wall Street Journal. Sunlight Financial to Go Public Through Combination With Apollo-Backed SPAC
The company ran a point-of-sale finance platform: residential solar contractors used it to offer loans to homeowners, the loans were originated by bank partners (primarily Cross River Bank), and Sunlight sold them to institutional investors.2SEC. Sunlight Financial Holdings 10-K Filing
On September 28, 2022, Sunlight disclosed that it expected to record a non-cash impairment charge of $30 million to $33 million for the third quarter, tied to advances it had made to a solar installer partner with serious liquidity problems. It also withdrew its full-year 2022 outlook. The next day, the stock fell $1.44 to close at $1.08, a drop of more than 57%.3Robbins LLP. Sunlight Financial Holdings Inc.
The Securities Fraud Class Action
On December 16, 2022, investor Kathie Fung filed a securities fraud class action in the U.S. District Court for the Southern District of New York. The case was assigned to Judge Alvin K. Hellerstein, and Matthew Millunchick was later appointed lead plaintiff.4Stanford Law School Securities Class Action Clearinghouse. Sunlight Financial Holdings Inc. Securities Litigation
The class period ran from January 25, 2021, through September 28, 2022. The complaint alleged that Sunlight and its executives concealed three problems that made their public statements misleading:
- The company lacked effective underwriting and risk evaluation for its contractor advance program.
- It lacked the monitoring systems needed to detect bad debt accumulating in that program.
- It lacked effective internal controls over the accounting and reporting of non-cash advance receivables.
The plaintiffs argued that the September 2022 impairment charge was the foreseeable result of problems the defendants had hidden.5D&O Diary. Fung v. Sunlight Financial Holdings Inc., Complaint
The individual defendants split into two groups. The “Sunlight Defendants” were CEO Matthew Potere, Barry Edinburg, and Rodney Yoder. The “Spartan Defendants,” associated with the SPAC side of the merger, were Geoffrey Strong, James Crossen, Olivia Wassenaar, Wilson Handler, Christine Hommes, and Joseph Romeo. Claims were brought under Sections 10(b), 14(a), and 20(a) of the Securities Exchange Act of 1934.6Strategic Claims Services. Sunlight Financial Stipulation of Settlement
The parties signed a stipulation of settlement on August 8, 2024, for $3.5 million. The defendants denied any wrongdoing, calling their conduct “at all times proper” and describing the settlement as a way to avoid the burden of continued litigation.6Strategic Claims Services. Sunlight Financial Stipulation of Settlement The claim filing and exclusion deadlines closed on November 19, 2024. Judge Hellerstein held the fairness hearing on December 10, 2024, and entered final approval and judgment on December 16, 2024. The settlement funds have since been distributed.7Strategic Claims Services. Sunlight Financial Holdings Inc. Securities Litigation
What the Bankruptcy Meant for Shareholders
On October 30, 2023, Sunlight filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware (case 23-11794) under a pre-arranged restructuring support agreement with Cross River Bank and a group of solar energy investors.8SEC. Sunlight Financial Chapter 11 Press Release The company emerged on December 7, 2023, as a private company owned by a consortium that included affiliates of Greenbacker Capital Management, Sunstone Credit, IGS Ventures, and Cross River Bank.9ABF Journal. Sunlight Financial Emerges From Restructuring Process
Trade creditors, contractors, and installers were paid in full under the plan. Public shareholders were not: existing equity was cancelled in the reorganization, wiping out SUNL stockholders. That is why the class settlement is the only meaningful recovery mechanism for investors who held shares during the class period.
The Cross River Bank Case
In September 2024, investor Mitchell Wax filed a separate securities fraud class action against Cross River Bank in the U.S. District Court for the District of New Jersey. The complaint alleged that Cross River had participated in a scheme with Sunlight to originate and warehouse risky solar loans, letting Sunlight conceal liabilities from investors. According to the plaintiffs, Cross River raised its lending limits for Sunlight and let the company exceed them, keeping the exposure off the bank’s own balance sheet while collecting volume-based fees.10ABA Banking Journal. New Jersey District Court Dismisses Investor Solar Tech Lawsuit Against Cross River Bank
Cross River moved to dismiss in July 2025. On April 1, 2026, Judge Esther Salas dismissed the complaint without prejudice. She found that the plaintiffs had failed to plead securities fraud or scheme liability adequately: the complaint did not allege that Cross River made any independent public statements or engaged in independently deceptive conduct, and the investors had not shown reliance because Cross River’s behind-the-scenes role was unknown to them when they invested.10ABA Banking Journal. New Jersey District Court Dismisses Investor Solar Tech Lawsuit Against Cross River Bank
The plaintiffs had 30 days to amend. As of the last docket entry on May 29, 2026, no amended complaint had been filed and the May 1, 2026 deadline had passed.11CourtListener. Wax v. Cross River Bank, Docket
Consumer Protection Lawsuits
Homeowners and state regulators have brought a separate set of cases attacking how Sunlight’s loans were sold.
Minnesota Attorney General
On March 8, 2024, Minnesota Attorney General Keith Ellison sued Sunlight Financial, GoodLeap, Solar Mosaic, and Dividend Solar Finance in Hennepin County court. The complaint alleged the lenders violated state consumer protection laws by disguising hidden upfront fees that inflated the true cost of solar financing. Those fees typically added 15% to 30% to a borrower’s costs, and in some cases up to 54%. The state estimated the lenders had collected roughly $35 million in hidden fees on more than 5,000 Minnesota loans originated since 2017.12Minnesota Attorney General. Attorney General Ellison Sues Solar-Lending Companies
The defendants removed the case to federal court, but the U.S. District Court for the District of Minnesota remanded it to Hennepin County in January 2025 after the state dropped its sole federal claim. The case remained active in state court as of that remand.13GovInfo. State of Minnesota v. GoodLeap LLC, Order
Multi-State Attorney General Letter
In November 2022, a coalition of nine state attorneys general led by North Carolina and Kentucky sent a formal letter to Sunlight Financial and four other solar lenders. They asked the companies to suspend loan payments and interest for customers who had financed solar systems through Pink Energy (formerly Power Home Solar) but never received working installations. Pink Energy had filed for bankruptcy the previous month.14North Carolina Department of Justice. Attorney General Josh Stein Calls on Five Solar Lending Companies to Suspend Loan Payments and Interest for Pink Energy Customers
Individual Borrower Suits
Some homeowners have fought Sunlight-related loans on their own. In one case reported by KFOX14, El Paso resident Lorena Vargas was sued for over $100,000 on two solar loans she says were fraudulent. Vargas alleged the loans were tied to solar panels that were never installed at her home, that the paperwork was forged, and that credit checks were run without her consent. She filed a countersuit against Cross River Bank, Titan Asset Purchasing LLC, and Sunlight Financial LLC seeking to be cleared of the debt, and reported the matter to police as identity theft.15KFOX14. El Paso Grandmother Fights $100K Solar Loan Lawsuit She Says Is Fraudulent