By Jonathan Stempel
NEW YORK, March 14 (Reuters) - Signature Bank and three former top executives were sued on Tuesday by
shareholders who accused the New York bank of fraudulently
proclaiming it was financially strong a mere three days before
it was seized by a state regulator.
The proposed class action against Signature and its former
chief executive officer Joseph DePaolo, chief financial officer
Stephen Wyremski and chief operating officer Eric Howell was
filed in the federal court in Brooklyn.
It seeks unspecified damages for shareholders between March
2 and 12 when New York's Department of Financial Services took
over Signature, two days after the Federal Deposit Insurance
Corp seized Silicon Valley Bank.
Signature did not immediately respond to requests for
comment.
Founded in 1999, Signature specialized in real estate
lending and provided many services to law firms, and in recent
years made a push for cryptocurrency deposits. Former U.S.
President Donald Trump had been a client until 2021.
Signature ended 2022 with $110.4 billion of assets and $88.6
billion of deposits, and is the second-largest U.S. bank to fail
since 2008. Silicon Valley Bank is the largest.
In Tuesday's lawsuit, shareholders led by Matthew Schaeffer
said Signature hid how it had been "susceptible to a takeover"
by making false or misleading statements about its health, in
part to quell fears sparked by Silicon Valley Bank's troubles.
These statements included that Signature could meet "all
client needs," and had enough capital and liquidity to
distinguish itself from rivals during "challenging times."
Signature's market value was about $6.5 billion before its
collapse.
The lawsuit was filed by the law firm that sued Silicon
Valley Bank's parent SVB Financial Group and its CEO
and CFO on Monday.
On Sunday, U.S. regulators decided to make Signature and
Silicon Valley Bank depositors whole regardless of how much they
held in their accounts.
Shareholders would receive no protections. Regulators said
the move would protect the U.S. economy by strengthening public
confidence in banking.
The case is Schaeffer v Signature Bank et al, U.S. District
Court, Eastern District of New York, No. 23-01921.
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debt ceiling issue BREAKINGVIEWS-Bank woes make winners of money market villains BREAKINGVIEWS-Startup CEOs learn a lesson in counterparty risk GRAPHIC-SVB, Signature Bank are first bank failures since 2020 GRAPHIC-The path to the fall of Silicon Valley Bank ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
(Reporting by Jonathan Stempel in New York
Editing by Nick Zieminski)
Messaging: jon.stempel.thomsonreuters.com@reuters.net))
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