Bakhtiari & Harrison is investigating claims on behalf of customers of First Republic Securities customers whose financial advisors recommended investments in First Republic Bank stock which declined during the banking crisis in May 2023. Regulators seized First Republic Bank, which was purchased by JP Morgan and later closed.
First Republic Bank Investor Claims Investigation
In March 2023, First Republic Bank filed for bankruptcy. As a result, many investors across the country lost virtually all of their investment in First Republic Bank stock.
In May 2023, the California Department of Financial Protection and Innovation took over citing “unsound business practices.” The California regulator appointed the Federal Deposit Insurance Corporation (FDIC) as the bank’s receiver following the collapse of Silicon Valley Bank.
According to CBS News, before entering receivership, “First Republic shares had lost 97% of their value since the start of the year, wiping out more than $21 billion off First Republic’s market value.”
A November 2023 Material Loss Review found that the FDIC missed opportunities for earlier supervisory actions. The FDIC’s handling of uninsured deposits also came under scrutiny, with recommendations for reevaluating guidelines and non-capital triggers for regulatory actions.
The bank’s failure may have been attributed to “contagion effects” from other bank failures, leading to a run on deposits that significantly reduced its liquidity. The bank’s strategy of attracting high net-worth customers with competitive loan terms and funding growth through low-cost deposits increased its sensitivity to interest rate risk. This, combined with portfolio declines, limited its ability to recover. By April 2023, the stock reached as low as $2.98 per share.
In June 2023, the Office of the Inspector General of the FDIC reported a final estimated loss of $15.6 billion to the Deposit Insurance Fund.
If your broker recommended these securities without adequately disclosing the liquidity risks, concentration exposure, or noncumulative preferred stock characteristics, you may have a viable FINRA arbitration claim.
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Contact Bakhtiari & Harrison
Investors may be able to file a claim with the Financial Industry Regulatory Authority (FINRA) to recover their investment losses. Bakhtiari & Harrison is committed to helping affected investors. Contact our experienced lawyers to discuss your investment loss recovery options.
For investors who held First Republic Bank preferred shares specifically, visit the First Republic Bank Preferred Stock Investor Loss Recovery page.