Judge trims First Citizens claims that HSBC poached Silicon Valley Bank workers
1:32 pm Wednesday, July 10th, 2024
By Daniel Wiessner
(Reuters) – A federal judge in California has dismissed most of First Citizens BancShares’ $1 billion lawsuit accusing HSBC of poaching more than 40 employees of Silicon Valley Bank after its high-profile collapse.
U.S. Magistrate Judge Laurel Beeler in San Francisco late Tuesday said that she lacked the ability to hear some of the claims by First Citizens, which acquired Silicon Valley Bank when it failed last year, because they alleged conduct that occurred outside California.
Beeler also tossed claims against several HSBC entities and former Silicon Valley Bank employees who joined HSBC, saying First Citizens had not shown an illegal conspiracy to poach workers and trade secrets.
“Right now, the allegations against most defendants show only a failed bank and employees decamping to a better business opportunity,” Beeler wrote.
An HSBC spokesperson in a statement said the bank was pleased with the ruling.
“HSBC 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,” the spokesperson said.
A representative of First Citizens did not immediately respond to a request for comment.
Beeler is scheduled to hold a conference in August to discuss the next steps in the case.
The U.S. Federal Deposit Insurance Corporation took over Silicon Valley Bank in March 2023 after a bank run in which depositors rushed to pull out their money, causing the largest bank failure since the 2008 financial crisis.
First Citizens then purchased the failed bank’s assets and deposits, and HSBC separately acquired the lender’s UK arm.
First Citizens claims in its lawsuit that David Sabow, who led Silicon Valley Bank’s technology and healthcare banking segment before moving to HSBC, met with top HSBC executives numerous times and shared plans to poach workers in order to launch a competing venture capital business.
HSBC has denied wrongdoing and said Sabow’s efforts to recruit from Silicon Valley Bank, which had about 8,500 employees when it collapsed, were legitimate and predated First Citizens’ takeover.
Beeler on Tuesday mostly sided with HSBC, but allowed three claims against Sabow for alleged trade secrets theft and breach of contract to move forward. The judge also left the door open for First Citizens to establish jurisdiction over HSBC’s UK arm, where Sabow is employed.
(Reporting by Daniel Wiessner in Albany, New York; Editing by Alexandra Hudson)
