Wollmuth Maher & Deutsch LLP obtained a victory in a shareholder class action in the Eastern District of New York on behalf of the FDIC as Receiver for Signature Bank (“FDIC-R”). The Firm obtained the dismissal of a class action complaint filed after the failure of Signature Bank against former directors and officers of Signature Bank and KPMG LLP (Signature Bank’s auditor). The complaint asserted claims under Section 10(b) of the Securities Exchange Act and Rule 10b-5(b). After the FDIC-R intervened in the action, the Firm moved on behalf of the FDIC-R to dismiss the complaint in its entirety based on, among other reasons, a lack of standing because the FDIC-R owns plaintiff’s claims pursuant to the succession clause under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”). In an Opinion and Order, dated March 21, 2025, the Court dismissed the action, holding that “the FDIC owns Plaintiff’s claims pursuant to the succession provision of [FIRREA].” The Court rejected plaintiff’s argument that the succession clause only applies to a shareholder’s derivative claims, finding that the “Succession Clause’s applicability does not hinge on some distinction between direct and derivative claims.” The Court added that such a “dichotomy could also circumvent FIRREA’s priority scheme for satisfying Signature [Bank]’s outstanding obligations” because “[e]rroneously reading in a direct-derivative distinction would usurp claims that the FDIC could recover from and then distribute proceeds pursuant to the priority scheme.”

The case is captioned Sjunde AP-Fonden v. DePaolo et al., Case No. 1:23-cv-01921-FB-JRC (E.D.N.Y.).