Signature Bank Hit With Investor Suit Over Failure

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Signature Bank was hit with its first investor suit since the bank went into receivership Sunday, accused of making misleading statements about its financial health and risks.

Matthew Schaeffer said he bought call options and was “economically damaged” by the bank’s failure, according to a complaint filed in federal court in Brooklyn, New York, on Tuesday.

Related: Signature Bank Faced Criminal Probe Ahead of Firm’s Collapse

The suit alleges Chief Executive Officer Joseph DePaolo issued a statement March 9 claiming Signature was a “well-diversified” bank with “in excess of $100 billion in assets,” just days before it was taken over by New York State’s Department of Finance. “Signature bank did not have the strong fundamentals that it represented itself as having,” according to the suit.

Statements by executives “were materially false and or misleading” because they misrepresented and failed to disclose adverse facts pertaining to the company’s business, operations and prospects, according to the lawsuit.

Susan Turkell Lewis, a spokeswoman for Signature, didn’t immediately return a telephone message and email seeking comment about the suit.

The complaint also claims the bank violated federal securities law and seeks unspecified damages.

The case is Matthew Schaeffer v Signature Bank 23-CV-1921, US District Court for the Eastern District of New York (Brooklyn).

Photo: A Signature Bank branch in New York on March 13. The sudden closure of New York’s Signature Bank by state regulators Sunday underscored the urgency of extraordinary US efforts to backstop the nations banking system and quell mounting concerns among customers about the safety of their deposits./Bloomberg

Copyright 2023 Bloomberg.


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