First Citizens can move forward with its $1.2 billion lawsuit against HSBC that alleges the British bank poached 42 employees from Silicon Valley Bank ahead of First Citizens’ acquisition of the failed SVB, U.S. Magistrate Judge Laurel Beeler said Thursday.
But, Beeler said, the suit “is confusing and needs to be cleaned up.” The judge gave First Citizens 28 days to iron out the wrinkles in an amended complaint.
First Citizens sued HSBC in May, singling out executive David Sabow, who previously spent more than a decade as an executive at SVB.
Sabow, First Citizens alleged, was chief architect of “Project Colony,” a calculated departure of former SVB employees to HSBC so that HSBC could gain access to SVB’s confidential and trade secret information about tech and healthcare clients.
First Citizens acquired SVB in March 2023 when the latter collapsed following a bank run.
Sabow led the departure of 42 former SVB employees, including six “core leaders”: Sunita Patel, Melissa Stepanis, Peter Kidder, Kevin Longo, Rebekah Hanlon, and Katherine Andersen, First Citizens alleged, naming the six as defendants in the suit.
According to the suit, Sabow told HSBC that bringing over these bankers could make them as much as $66 million in profits in the first year, with that figure jumping to more than $1 billion by the fifth year. He made the estimations using data from SVB, the suit said.
“First Citizens plausibly pleads viable theories supporting the contract and misappropriation claims against the HSBC successor to SVB UK and Mr. Sabow,” Beeler wrote. “But it lumps the other defendants together, thus does not give fair notice of the claims against them, and seemingly predicates claims on conduct that predates the purchase agreement.”
A spokesperson for First Citizens told Banking Dive they are “confident that the facts and the law clearly support our position and we will continue to vigorously protect our company and our stakeholders.”
An HSBC spokesperon told Bloomberg the bank is “strongly committed to the innovation banking space and to our employees, and will continue to vigorously defend against the lawsuit brought by First Citizens.”