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id: 819, Created by Stan Vick, Scout
PacWest (PACW) Collapse Case
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- In May 2023, the PacWest stock price collapsed after the FED rate hike and sharp deposit outflows. As a result, shareholders took a huge loss in their $PACW holdings.
- Investors suspect PacWest of concealing the financial impact of rising interest rates, liquidity shortages, and other issues which ultimately led to a buyout by Banc of California.
On May 3, 2023, Bloomberg published an article titled “Regional Banks Sink as PacWest Weighs Strategic Options” which stated that “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.”
On the same day, Forbes published an article titled “PacWest Stock Falls 39% After Federal Reserve’s Latest Interest Rate Hike” which stated that “PacWest has been considering a breakup or capital raise.”
On this news, $PACW fell over 50%, damaging shareholders.
Furthermore, on May 11, 2023, PacWest revealed that “during 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, $PACW fell nearly 23%.
Investors have reasons to suspect PacWest of concealing the financial impact of rising interest rates, liquidity shortages, and other issues which ultimately led to a buyout by Banc of California.
Failure to Disclose,
Shock Event Date
04 May 2023
11 September 2023
Lead Plaintiff Deadline
10 November 2023
13 September 2023
An investor filed a proposed class action against PacWest Bancorp, accusing $PACW of downplaying its vulnerability to increasing interest rates and disregarding warning signals stemming from the Silicon Valley Bank's collapse earlier this spring, resulting in a significant decline in its stock value.