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Friday, June 9, 2023

Shareholders sue Signature Bank and ex-executive for fraud

  • Signature Bank and three of its former executives have been hit with a class action lawsuit.
  • Shareholders of the bank accused the bank of fraudulently misrepresenting its financial stability before it was seized.
  • The lawsuit names the bank’s former chief executive, chief financial officer and chief operating officer.
  • Shareholders are seeking unspecified damages from the bank.

Signature Bank, a crypto-friendly financial institution shut down by the New York Department of Financial Services (New York Food Safety Authority) was facing a class action lawsuit from its shareholders earlier this week. The lawsuit, filed in Brooklyn federal court, also names former executives at the failed bank.

Signature Bank Allegedly Misrepresented Its Finances

according to a Press release From Rosen Law Firm, which represents the bank’s shareholders, Signature Bank is accused of making misleading statements about its financial condition before it was seized on March 12. Plaintiffs include purchasers of Signature Bank stock between March 2, 2023 and March 12, 2023. This includes people who buy bank calls and/or sell puts.

Signature Bank doesn’t have the strong fundamentals it claimed to have in the days leading up to the takeover, or take other actions to make it vulnerable to takeover by the New York Department of Financial Services. ”

Rosen Law Firm

In addition, shareholders suffered losses when truthful information about the bank entered the market, the lawsuit said. The law firm encourages all affected investors to join the class action, which also names former CEO Joseph DePaolo, former CFO Stephen Wyremski and former COO Eric Howell. The lawsuit is seeking unspecified damages from Signature Bank.

NYDFS’ decision to close the bank was made in cooperation with the Federal Reserve in the interests of the US economy. After the seizure, former U.S. Rep. Barney Frank claimed it was nothing more than a show of force by federal regulators. “Regulators want to send a very strong anti-encryption message,” Frank told CNBC

earlier this week.

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