Shareholders sue New York-based Signature Bank, 3 former top executives

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Tuesday, March 14, 2023
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NEW YORK (WABC) -- Shareholders sued Signature Bank and three of its former top executives Tuesday, alleging the New York bank declared itself financially healthy in the days before it was seized by state regulators.

Signature Bank "misrepresented and failed to disclose" adverse facts, the lawsuit said.

"Specifically, Defendants made false and/or misleading statements and/or failed to disclose that: (1) Signature Bank did not have the strong fundamentals that it represented itself as having in the days immediately prior to its takeover, or otherwise took action that left it susceptible to a takeover by the New York Department of Financial Services; (2) as a result, it became a target for regulatory action by the DFS, and (3) as a result, Defendants' public statements were materially false and/or misleading at all relevant times," the lawsuit said.

The lawsuit was filed in Brooklyn federal court by the Rosen Law Firm, the same firm that sued Silicon Valley Bank on Monday. It seeks unspecified damage.

The New York State based financial institution, with a big real estate lending business that recently also began serving the cryptocurrency industry, was closed by state authorities in the wake of the Silicon Valley Bank collapse.

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Gov. Kathy Hochul sought to reassure depositors Monday after the state took over.

"This is an unusual circumstance," Hochul said during a news conference at her office in Lower Manhattan. "But the main message I want to deliver is that New Yorkers should have confidence that their money is secure, and wherever they have chosen to bank, that that is protected."

Signature suffered a crisis of confidence stemming from SVB Financial Corp's seizure Friday, losing billions of dollars in a bank run.

Signature is the third largest bank to fall into financial failure in U.S. history.


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