Securities
Sjunde AP-Fonden v. FDIC in its capacity as receiver for Signature Bank
Date: Aug. 19, 2026
Issue: Whether Swedish pension fund management firm Sjunde AP-Fonden possessed prudential standing to pursue securities fraud claims against KPMG and former Signature Bank officers.
Case Summary: In a unanimous decision, a Second Circuit panel vacated a New York federal court decision ruling that Sjunde AP-Fonden (AP7) lacked prudential standing to pursue securities fraud claims against KPMG and former Signature Bank officers.
In March 2023, AP7 sued former Signature Bank officers and KPMG, alleging they committed securities fraud by misleading investors about the bank’s liquidity risks and risk management practices. Beginning in 2017, Signature expanded into cryptocurrency and digital assets, fueling rapid growth but leaving the bank heavily dependent on large, uninsured deposits. Regulators later raised concerns about the bank’s liquidity and risk controls. AP7 alleged the officers and KPMG understated those risks and inflated Signature’s stock price. After the cryptocurrency market declined, Signature suffered a major deposit run on March 10, 2023. New York regulators closed the bank two days later and appointed the FDIC as receiver (FDIC-R). The district court later consolidated two securities fraud class actions, named AP7 lead plaintiff, and allowed AP7 to file an amended complaint against the former officers and KPMG under Section 10(b) and Rule 10b-5 of the Securities Exchange Act of 1934.
FDIC-R intervened and moved to dismiss the complaint, arguing that AP7 lacked prudential standing and failed to exhaust the administrative remedies required under the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (FIRREA). Prudential standing is a set of self-imposed judicial rules that allow federal courts to refuse a lawsuit if the plaintiff is not the proper person to bring the claim. Judge Frederic Block of the Eastern District of New York granted the FDIC’s motion on prudential-standing grounds, concluding FIRREA’s Succession Clause transferred AP7’s securities fraud claims to the FDIC.
On appeal, the panel reversed, ruling AP7 had prudential standing because FIRREA’s Succession Clause did not transfer its securities fraud claims to the FDIC. The panel explained the third-party standing rule generally requires a party to assert its own legal rights. FDIC-R argued this rule barred AP7’s claims because the Succession Clause transferred those claims to the FDIC as Signature’s receiver. The panel disagreed, concluding the Succession Clause applies only to rights a person holds as a stockholder. AP7’s Rule 10b-5 claims arose instead from its status as a purchaser of securities. Because those claims belonged personally to AP7 and did not arise from stock ownership, FDIC-R did not acquire them.
After finding that AP7 had prudential standing, the panel also ruled that AP7 did not need to exhaust FIRREA’s administrative claims process. Relying on the Second Circuit’s decision in Bank of New York v. First Millennium Inc., the panel explained that FIRREA requires exhaustion for claims against a failed bank or the FDIC as receiver, not claims against independent third parties. Because AP7 sought recovery only from KPMG and the former Signature officers, not Signature or its assets, the panel held that FIRREA’s exhaustion requirement did not bar the suit.
Bottom Line: The Second Circuit held that AP7 could pursue its securities fraud claims against KPMG and former Signature Bank officers because FIRREA did not transfer those claims to the FDIC or require AP7 to exhaust the act’s administrative process.
Document: Opinion
