Robbins LLP informs investors that a shareholder filed a class action on behalf of persons and entities that purchased or otherwise acquired PacWest Bancorp (NASADAQ: PACW) securities between February 28, 2022 and May 3, 2023. PacWest operates as a holding company for its wholly-owned subsidiary, Pacific Western Bank (“PWB”), a regional bank based in Los Angeles, California.
What is this Case About: PacWest Bancorp (PACW) Misled Investors Regarding the Impact of Interest Rate Hikes on Pacific Western Bank
According to the complaint, during the class period, defendants failed to disclose to investors that: (i) PacWest had understated the impact of interest rate hikes on PWB, a smaller bank with excessive concentration in specific industries; (ii) accordingly, the Company had overstated the stability and/or sustainability of its deposit base; and (iii) as a result, PacWest was exceptionally vulnerable to excessive deposit flows and/or a liquidity crisis.
On March 10, 2023, PacWest issued a press release to reiterate the supposed strength of the Company’s financial position, stating that PWB is a “well-performing, well-diversified, full-service commercial bank with more than twenty years of history.” However, less than two months later on May 3, 2023, Bloomberg published an article entitled “Regional Banks Sink as PacWest Weighs Strategic Options.” According to Bloomberg, “PacWest Bancorp led a renewed slide in regional banks after a report that it’s weighing strategic options including a sale heightened concerns that the turmoil engulfing smaller lenders is far from over.”
Shortly thereafter, Forbes published an article entitled “PacWest Stock Falls 39% After Federal Reserve’s Latest Interest Rate Hike.” The Forbes article stated that “[h]igher interest rates intensify the spread of the latest bank failure virus that drives deposits out of vulnerable banks, tanks their stock prices, and ultimately prompts an FDIC-enabled rescue[,]” and “the big loss an acquirer would incur to mark down the value of some PacWest loans makes it unlikely a buyer will emerge for the entire bank.”
Following the publication of the Bloomberg and Forbes articles, PacWest’s stock price fell $2.84 per share, or 44.17%, to close at $3.59 per share on May 4, 2023. Then, on May 11, 2023, PacWest disclosed in a Quarterly Report filed on Form 10-Q with the SEC that it had lost a significant percentage of its deposits following the publication of the Bloomberg and Forbes reports. Specifically, the Company stated that “[d]uring the week ended May 5, 2023, our deposits declined approximately 9.5%, with a majority of that decline occurring on May 4th and May 5th after the news reports on the afternoon of May 3rd.” On this news, PacWest’s stock price fell $1.38 per share, or 22.77%, to close at $4.68 per share on May 11, 2023.
Finally, on July 25, 2023, it was announced that PacWest had entered into an agreement to be purchased by Banc of California, Inc. Under the terms of the agreement, PacWest stockholders were to receive 0.6569 of a share of Banc of California common stock for each share of PacWest common stock.
What Now: Similarly situated shareholders may be eligible to participate in the class action against PacWest Bancorp. Shareholders who want to act as lead plaintiff for the class must file their motion for lead plaintiff by November 10, 2023. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member. For more information, click here.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
About Robbins LLP: Some law firms issuing releases about this matter do not actually litigate securities class actions; Robbins LLP does. A recognized leader in shareholder rights litigation, the attorneys and staff of Robbins LLP have been dedicated to helping shareholders recover losses, improve corporate governance structures, and hold company executives accountable for their wrongdoing since 2002. Since our inception, we have obtained over $1 billion for shareholders.
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