US appeals court revives Signature Bank collapse lawsuit despite FDIC objection

Regulators closed Signature on March 12, 2023, after worried customers withdrew several billion dollars, or about 20% of its deposits, following the collapse of the larger Silicon Valley Bank two days earlier.

Both banks had growing exposure to cryptocurrency clients. Fallout claimed another large bank, First Republic, in May 2023.

The FDIC blamed Signature's demise on inadequate risk management in pursuit of "rapid, unrestrained growth." By 2021, about 92% of Signature's deposits were uninsured, and 40% belonged to just 60 clients.

The appeals court returned the case to U.S. District Judge Frederic Block in Brooklyn, who dismissed it in March 2025. Wednesday's decision did not address the lawsuit's merits.

Flagstar Bank FLG.N acquired substantially all Signature deposits. The FDIC provides deposit insurance to about 4,250 banks and savings associations.