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Signature Bank and former executives sued by shareholders for alleged fraud

Shareholders have accused the bank of falsely claiming to be “financially strong” just three days before it was seized by the state regulator.

The recently cancelled password-friendly New York City Signature Bank filed a class action lawsuit with former CEO Franz de Paul, chief operating officer Stephen Wyremsky and chief strategy officer Eric Howell, accusing them of fraud, Reuters reported.

Shareholders complained that the bank falsely claimed to be "doing well" just three days before it was taken over by state regulators. The lawsuit provides for unspecified compensation for losses to shareholders held during the period from March 2 to 12.

The lawsuit was brought by Michael Schaefer's leading shareholder in federal court in Brooklyn. The appellant claimed that Signature Bank disguised its sensitivity to the acquisition based on and making false statements or false statements about its physical condition. It is reported that the purpose of this statement is to resist the anxiety caused by the inconvenience encountered by Silicon Valley banks. Silicon Valley Bank was taken over by the Federal Deposit Insurance Corporation two days before Signature Bank.

According to the lawsuit, Signature Bank said in a statement that it was able to meet "full customer satisfaction", had sufficient capital and liquidity, to break itself out of competitors in a "challenging phase", and that its overall accounting strength was strong. It is reported that this kind of explanation conceals the true operation of financial institutions. It is understood that the lawsuit was filed on Monday by Silicon Valley Bank Corporation SVB Financial Group and the same law firm that served as chief operating officer of CEO.

In an effort to boost public trust in the banking sector and maintain economic development, U.S. regulators decided on Sunday to pay full compensation to depositors at Signature Bank and Silicon Valley Bank, regardless of their balances. However, the same maintenance will not be extended to the company's shareholders.

About: marathon data: the security of savings held in Signature Bank can be used

On March 12, the Financial Services Center of New York State announced that it had shut down and took over Signature Bank, the company's headquarters in New York. According to a statement released by the Federal Reserve meeting on March 12, the closure of the bank was definitely made in collaboration with the Federal Reserve meeting in order to maintain the development of the US economy and boost public confidence in the financial system.

On March 13th, Myers Donald, a former US congressman who happened to be a member of the bank's supervisory board, indicated that the recent shutdown of Signature Bank may be to show combat effectiveness. Donald said the only sign of a problem in Signature was the $10 billion savings squeeze that occurred on March 10th, which he attributed to the proliferation of Silicon Valley banks.

Donald shared that in his view regulators expect a strong anti-data encryption message, even if it does not fail based on stock fundamentals. She shared in an interview with CNBC:

"I think part of what happened is that regulators expect a strong anti-data encryption message. (.) Everyone has become a poster boy, because according to the stock fundamentals, there is no broken capital chain. "
by Judith BannermanQuist
© 2023 WJB All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

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