Shareholders suing Signature Bank
Shareholders of Signature Bank filed a class action lawsuit against the bank and three former executives on Wednesday. It alleges that it made false or misleading statements about its financial health just days before it was shut down by authorities. Reuters reported.
After the Federal Deposit Insurance Corporation (FDIC) foreclosed on a Silicon Valley bank, the New York State Department of Financial Services (NYDFS) announced Thursday it was closing Signature Bank to protect depositors. The class action lawsuit seeks damages against those who were shareholders of the bank between March 2nd and March 12th.
Shareholders, led by Matthew Schaeffer, have accused Signature Bank of inappropriately emphasizing its financial health to assuage concerns raised by Silicon Valley Bank’s troubles.
As an example, Signature Bank “maintains a high level of capitalization and strong and consistent earnings that differentiate it from its competitors in difficult times.”
Shareholders of the parent company of Silicon Valley Bank also filed a class action lawsuit against Silicon Valley Bank and its executives on the 13th. The law firm in charge is reportedly the same as the Signature Bank case.
Signature Bank is also one of the leading banks to serve the cryptocurrency industry, and one of the bank’s board members, Barney Frank, said regulators were shutting down Signature Bank to show they are against cryptocurrencies. He argued that there was an aspect of
Depositors withdrew about 1.3 trillion yen after the bankruptcy of SVB, but the bank’s total assets as of December 31, 2022 were about 14.6 trillion yen, and it is said that the suspension of business was not necessary.
A spokesperson for New York state regulator NYDFS, however, denied that any particular industry, including cryptocurrencies, was the reason for the closure because Signature Bank has a wide range of customers.
connection: Signature Bank Director “U.S. Regulators Oppose Virtual Currencies”
What Signature Bank announced
Signature Bank announced on the 9th, just before Silicon Valley Bank went bankrupt, about its financial situation and the status of its cryptocurrency-related business.
First, it has more than 13 trillion yen ($100 billion) in assets spread across nine business areas across the United States, including law firms, accounting firms, healthcare companies, manufacturers, and real estate management companies. It explains that it has a diverse deposit structure, with deposits from medium-sized companies accounting for more than 80%.
In addition, as of March 8, cash on the balance sheet was approximately ¥610 billion (approximately $4.54 billion), debt outstanding was approximately ¥890 billion ($6.58 billion), and liquid securities were It said it had about 3.6 trillion yen (about $26.41 billion) and about 12 trillion yen ($89.17 billion) in deposits.
Relationship with the virtual currency field
Also, Signature Bank CEO Joseph J. DePaolo said that cryptocurrency-related deposits are limited.
Signature Bank does not invest in, trade, hold, custody, or lend against digital assets.
Our relationship with the cryptocurrency sector is limited to US dollar deposits only. There are also plans to reduce these deposits.
Especially after the FTX bankruptcy, various government-affiliated organizations are calling attention to the link between banks and cryptocurrencies. The International Monetary Fund (IMF), for example, just today discussed the macro-financial impact of cryptocurrencies and cautioned against the potential impact on banks.
connection: IMF warns of cryptocurrency impact on banks = G20 report
What is custody
A term widely used for assets other than virtual currency. It refers to a service that performs a wide range of operations, such as asset custody, settlement related to trading, receipt of principal and interest, dividends, and exercise of voting rights. A company that performs custody is called a custodian.
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