AP7 Achieves Significant Victory at the Second Circuit in Signature Bank Collapse Suit

We are proud to announce a significant appellate win on behalf of Lead Plaintiff Sjunde AP-Fonden (AP7) in a securities fraud class action arising from the 2023 collapse of Signature Bank, one of the largest bank failures in U.S. history. In a unanimous published opinion issued on August 19, 2026, the Second Circuit vacated the dismissal of investors’ claims against Signature’s former officers and its auditor, KPMG LLP, and remanded the case for further proceedings.

In a matter of first impression, the Court held that the Succession Clause in the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA) does not transfer investors’ Section 10(b) and Rule 10b-5 claims to the Federal Deposit Insurance Corporation (FDIC) when it becomes receiver of a failed bank, meaning those claims remain with the harmed investors like AP7. In reaching this conclusion, the Court recognized that securities fraud claims belong to defrauded purchasers and not to the receivership, and that investors need not exhaust the FDIC’s administrative claims process before pursuing claims against third parties.

The decision is an important precedent protecting the rights of investors in failed financial institutions, ensuring that bank failures do not extinguish shareholders’ federal remedies against those responsible for the fraud.

KTMC partner Sharan Nirmul argued the appeal, alongside a team including Richard A. Russo, Josh Materese, Nathaniel C. Simon, and co-counsel.