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Signature Bank class action overview:
- Who: A Signature Bank investor is suing the bank.
- Why: The plaintiff says the bank misled investors about its stability just days before it was taken over by state regulators.
- Where: The Signature Bank class action was filed in a New York federal court.
Signature Bank and its executives made false statements to investors about its stability just days before it was shut down by the New York Department of Financial Services (DFS) on March 12, a new class action lawsuit alleges.
Plaintiff Matthew Schaeffer filed the class action lawsuit against Signature Bank and its executives on March 14 in a New York federal court, alleging violations of the Securities Exchange Act.
The news comes in the wake of the March 10 collapse of Silicon Valley Bank, whose failure is in part attributed to investors and depositors withdrawing funds en masse after customers started to raise concerns the bank could no longer pay its depositors.
As the Silicon Valley Bank’s failure began to make headlines, executives of Signature Bank issued a March 9 “Update” “intended to calm investors and depositors in the wake of chaos in the banking sector, such as the collapse of Silicon Valley Bank,” Schaeffer says.
The update told investors the bank was reiterating its “strong financial position” and limited digital-asset related deposit balances “in wake of industry developments,” adding that it had over $100 billion in well-diversified assets.
However, the update overstated the bank’s strong position, Schaeffer alleges. This is evidenced by the fact it was shut down just a few days later by the DFS in order to protect depositors, he says.
Signature Bank misled investors, causing financial harm, lawsuit alleges
Signature Bank failed to disclose that it did not have the strong fundamentals that it represented itself as having in the days immediately prior to its takeover, Schaeffer alleges.
On March 12, trading in the company’s shares were halted and remained halted as of the filing of the complaint, essentially rendering the company’s shares illiquid and valueless, the lawsuit states.
“As a result of Defendants’ wrongful acts and omissions, and the precipitous decline in the market value of the Company’s common shares, Plaintiff and the other Class members have suffered significant losses and damages.”
Schaeffer seeks to represent anyone who purchased or acquired publicly traded Signature Bank securities between March 2, 2023 and March 12, 2023. He is seeking certification of the class action, damages, fees, costs and a jury trial.
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The plaintiff is represented by Phillip Kim and Laurence M. Rosen of The Rosen Law Firm P.A.
The Signature Bank class action lawsuit is Matthew Schaeffer et al., v. Signature Bank, et al., Case No. 1:23-cv-01921 in the U.S. District Court for the Eastern District of New York.
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