Florida Police Pension Sues First Republic After Losing $600K on Stock

A Florida police pension fund filed a lawsuit against First Republic Bank this week after the fund lost over $600,000 in stocks.

On Tuesday morning, lawyers for the City of Hollywood Police Officers Pension Fund filed a class action lawsuit in the District Court in the Northern District of California against the First Republic Bank alleging that the bank "misrepresented the strength of the Company's balance sheet, liquidity, and position in the market."

"Among other things, the 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 (the 'Fed') raising the federal funds rate, thereby undermining the value of the Company's loan and securities portfolios and liquidity," the lawsuit said.

The lawsuit came shortly after First Republic Bank reported a loss of $102 billion in the first quarter of the year. During that time, First Republic Bank had a decrease of 58 percent in depositors and also said that it planned to cut a quarter of its workforce, Reuters reported.

The lawsuit includes a list of shares that the City of Hollywood Police Officer Pension Fund purchased and sold in the First Republic Bank. The purchase of shares was made by the pension fund on November 16, 2021, July 11, 2022, July 22, 2022, and August 5, 2022. The pension fund then sold shares on February 2, 2022, and October 25, 2022.

Newsweek analyzed the shares purchased and sold and determined that the City of Hollywood Police Officer Pension Fund lost over $611,000.

Newsweek reached out to lawyers for the pension fund via email for comment.

Earlier this year, the collapse of the Silicon Valley Bank (SVB) sparked widespread concerns about the economy and a possible larger fallout.

"We're not over bank failures, but depositors haven't had a crisis," billionaire investor Warren Buffet said this month.

The lawsuit filed by the pension fund mentioned the collapse of SVB and said, "On this news, the price of First Republic common stock declined by an astonishing $83.79 per share, or more than 72% over three trading sessions, from a closing price of $115.00 per share on March 8, 2023, to a closing price of $31.21 per share on March 13, 2023."

"Critically, the 2020 Annual Report downplayed and concealed the likelihood and extent of the risks posed to the Company by potential increases to interest rates, any related changes in deposit mix, and resulting deposit outflow," the lawsuit added.

First Republic Bank declined to comment after Newsweek reached out via email.

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