Last Updated on 1 hour by John Piper

Signature Bank, a New York-based financial institution, has been sued in a class action for fraud. The lawsuit also includes its former CEO, CFO and COO. The lawsuit was filed by the Eastern District Court of New York. This motion is for shareholders who bought Signature Bank stock between January 2016 – November 2019.

Signature Bank is accused of making misleading statements and false statements. According to the lawsuit, Signature Bank made misleading statements about its credit risk management and loan portfolio. The complaint claims that the defendants exaggerated the quality of bank loans, understated their allowance for loan losses and failed to disclose the fact that the bank wasn’t in compliance with certain banking regulations.

These actions, according to the complaint caused the stock price of the bank to artificially rise. This caused shareholders significant financial damage when the truth about the bank’s loan portfolio was revealed.

This lawsuit seeks to collect damages on behalf shareholders who bought stock from the crypto-friendly Signature Bank within the relevant time frame. The plaintiff will be represented by several law firms that specialize in securities litigation.

Signature Bank will defend itself

Signature Bank responded to the lawsuit by stating that it will vigorously defend itself against these allegations. Signature Bank has reiterated its commitment towards transparency and compliance with all applicable banking regulations.

Barney Frank, a former US Representative, commented on the closing of Signature Bank. Frank is also a member of the bank’s board. He noted that it seems like regulators are trying to demonstrate a ” very strongly anti-crypto” position. Frank stated this in an interview with CNBC:

Signature Bank’s class action lawsuit highlights the importance transparency and accurate reporting in financial services. Investors increasingly depend on the information provided by companies for investment decisions. It is vital that companies provide complete and accurate information to protect their shareholders’ interests and avoid possible legal action.

Coin Insider’s first article, The lawsuit against the crypto-friendly Signature Bank appeared first.