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KEY.US

KeyCorp (KEY) Financial Misrepresentation Case

N.D. Ohio
Court
1:23-cv-01520
Case number
27 Feb 2020
Class period Start
09 Jun 2023
Class period End
  • KeyCorp disclosed during MS Conf, that its financials will be softer than anticipated.
  • $KEY fell 4.31% & lost $430M of market cap, damaging shareholders.
  • Investors suspect Key of downplaying concerns with its liquidity while overstating the effectiveness of its liquidity strategy.
On June 12, 2023, at the Morgan Stanley Conference, KeyCorp’s CFO Clark H. I. Khayat disclosed that the Company anticipated Q2 2023 NII to be softer than earlier expected, “based on funding mix and deposit cost pressures.”

At the same conference, Key’s Chairman and CEO Christopher M. Gorman disclosed that clients are demanding higher interest rates on their deposits and that banks of Key’s size are likely facing higher capital and liquidity requirements by regulators.

On this news, $KEY fell 4.31% and lost $430 million of its market capitalization, damaging investors.

  • On March 6, 2023, Key disclosed that it had downwardly revised its FY 2023 guidance for NII, stating that it expects FY 2023 NII to rise by 1% to 4% compared to FY 2022, representing a significant reduction from the Company’s prior guidance that FY 2023 NII would rise 6% to 9% compared to FY 2022. The Company attributed this negatively revised guidance to “Deposit Beta and Funding Costs”, explaining that “marginal funding costs are increasing with rising market interest rates, and are expected to weigh on NII.”
  • On March 13, 2023, following the collapse of Silvergate Bank on March 8, 2023, Silicon Valley Bank on March 10, 2023, and Signature Bank on March 12, 2023, investors grew increasingly concerned about Key’s own liquidity. That same day, Odeon Capital downgraded the Company’s stock to hold from buy and BofA Global Research cut its price target on the Company’s stock to $17 from $20.
Taking all representations and consequent results into account, Investors have reasons to suspect that Key misled shareholders and downplayed concerns with its liquidity while overstating the effectiveness of its long-term liquidity strategy.
Alleged Offence
Misleading Statements
Financial Misrepresentation
Failure to Disclose
Omissions
Suspected Party
Directors
Management
Security Type
Stocks
Trade Direction
Long
Shock Event Date
12 June 2023
Filing date
04 August 2023
Judge
Hon. Donald C. Nugent
Collecting participants…
Created by Stan Vick, Scout

KeyCorp

KeyCorp operates as the holding company for KeyBank National Association that provides various retail and commercial banking products and services in the United States. It operates in two segments,...

    Ticker
    KEY.US
    ISIN
    US4932671088
    CIK
    91576
    Sector
    Financial Services
    Industry
    Banks - Regional
    Country
    USA
    Address
    127 Public Square, Cleveland, OH, United States, 44114-1306