Failed Bank First Republic Accused of Issuing Shares Shortly Before Going Bankrupt, Resulting in Multi-Million Dollar Losses

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First Republic Bank and broker Samuel Carl Schoner stand accused of investing customer funds in First Republic preferred shares, only for the bank to collapse in May 2023 before being acquired by JP Morgan Chase, resulting in massive investor losses. For instance, one $7 million lawsuit filed against First Republic and Schoner in northern California accuses the defendants of breach of fiduciary duty, negligence, elder abuse, and fraud.

Broker Samuel Schoner (CRD #1928356) is registered with First Republic Securities Company in San Francisco, CA, and previously settled a customer dispute in 2010 for $180,000 that alleged breach of fiduciary duty, negligent misrepresentation, breach of contract, fraud, elder abuse, and unsuitable recommendations.

Part of the problem may have been First Republic Bank offering preferred shares at above-market rates, enticing recommendations from brokers who may not have accounted for the added risk posed by investing in a troubled financial institution, which, in this case, eventually failed, resulting in losses for many investors.

When First Republic collapsed in May, its investors' preferred stock holdings dropped to near worthlessness and in some cases, such as the aforementioned suit, Schoner is alleged to have refused or failed to sell First Republic stock when asked by clients to do so prior to the bankruptcy, and to have intentionally misled elderly customers through unsuitable investments.

According to federal filings, First Republic Bank preferred offerings' underwriters included BofA Securities, Inc., J.P. Morgan Securities LLC, Morgan Stanley & Co. LLC, UBS Securities LLC, and Wells Fargo Securities, LLC. These firms may have recommended First Republic preferred shares to their client base, or distributed the shares to other broker-dealers whose representatives made the recommendation to invest in the fledgling and eventually-bankrupt First Republic Bank.

If you invested with a broker or investment adviser at these or other firms that unsuitably recommended purchasing and holding First Republic Bank preferred stock, please call an experienced FINRA arbitration attorney at The Law Offices of Jonathan W. Evans & Associates at (800) 699-1881 to discuss potential claims for losses as a result of First Republic Bank's collapse.

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