According to the lawsuit, KPMG and First Republic officials reiterated the health of the bank's business several times despite evident risks. The post First Republic Down 23% Premarket as Shareholder Sue Firm and Auditor appeared first on Tokenist.
The First Republic’s stock took another major blow in the Tuesday premarket after Bloomberg reported that the bank and its auditor had been sued by a public pension fund that holds a stake in the company. The stock fell more than 23% in premarket trading after dropping over 20% on Monday after-hours.
First Republic and its Auditor Repeatedly Issued Misstatements, the Lawsuit States
Shares of First Republic Bank are down 25% in premarket trading Tuesday after shareholders filed a lawsuit against the bank and its auditor KPMG, accusing them of issuing misstatements ahead of the banking turmoil last month. According to Bloomberg, the suit primarily targets the bank after its fallout in early March due to unprecedented outflows.
The lawsuit, filed in San Francisco court on Monday by a Florida-based public pension fund, alleges that First Republic, its executives, and KPMG have repeatedly overstated the safety of the bank’s business model. The misstatements were issued even though rising interest rates weighed on the value of the bank’s loan and securities portfolio, the fund stated in the lawsuit.
KPMG Issued Similar Audit Statements for the Collapsed Signature Bank
The latest lawsuit appears to be focused on the bank’s 2020 annual report, which allegedly downplayed and hid the risks related to potential interest rate increases and changes in its deposit mix and the consequent outflows. The 2020 report also included an audit signed by KPMG, which is likely why the auditor is also named in the lawsuit.
Do you think the First Republic could face severe consequences in light of the new lawsuit against itself and its auditor? Let us know in the comments below.