Investor Alert: Kaplan Fox Announces Investigation Of Capitala Finance Corp.

NEW YORK, Jan. 9, 2018

A class action complaint has been filed in the United States District Court for the Central District of California against Capitala, the Company's Chairman and Chief Executive Officer, and its Chief Financial Officer on behalf of investors that purchased or otherwise acquired the publicly traded securities of Capitala between January 4, 2016 and August 7, 2017, inclusive (the "Class") alleging violations of the Securities Exchange Act of 1934.

Capitala is a business development company that invests primarily in first and second liens, subordinated debt, and equity securities issued by lower and traditional middle-market companies.

On January 4, 2016, Capitala announced that its investment adviser, Capitala Investment Advisors, LLC, had voluntarily agreed to waive its quarterly incentive fee.

On August 7, 2017, Capitala disclosed in an aftermarket press release that six of its investments were on non-accrual status - twice as many as in the previous quarter.

On August 8, 2017, Capitala's CEO, Joseph B. Alala III, revealed during a Company conference call that the Company had been losing professional talent, including underwriting and portfolio management professionals, since the waiving of the incentive fee, and that this had led to a rising number of nonaccrual investments.  Following this news, Capitala's shares fell $3.82 per share, or approximately 30%, over the next three trading days to close at $8.99 per share on August 10, 2017.

The complaint alleges that throughout the Class Period, Defendants made materially false and misleading statements about the Company's business, operations, and prospects.  Specifically, Defendants made false and/or misleading statements and/or failed to disclose that (1) Capitala Investment Advisors had been losing professional talent in both underwriting and portfolio management due to the waiving of its incentive fee, (2) such loss of talent negatively impacted the quality of the Company's investment portfolio, and (3) as a result, Capitala's public statements were materially false and misleading at all relevant times.