City of Hollywood Police Officers' Retirement System has filed a complaint in federal court against First Republic and KPMG for alleged securities-law...
The Hollywood, Calif., police officers’ pension fund has filed a lawsuit in federal court against First Republic Bank and its auditor, KPMG, that alleges the bank misled investors about the strength of its business ahead of a steep stock slide.
The suit, filed in U.S. District Court for the Northern District of California, names current First Republic Bank CEO and former CFO Michael J. Roffler, current CFO Neal Holland, former CEO James H. Herbert II and former president and co-CEO Hafize Gaye Erkans as defendants, along with other senior executives at the firm. It also names KPMG.
First Republic’s stock fell 16% on Oct. 14 after its third-quarter 2022 results disappointed investors, the suit says. It fell another 72% from March 8 to March 13 on the heels of the collapse of Silicon Valley Bank and Signature Bank of New York. On March 14, the stock fell another 21% after it drew debt downgrades.
“Defendants understated and concealed the magnitude of the risks facing the company’s business model that would result from any decision by the Federal Reserve System raising the federal funds rate, thereby undermining the value of the company’s loan and securities portfolios and liquidity,” the suit says.
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