First Citizens Bank & Trust Co. sued HSBC Holdings Plc for allegedly raiding dozens of employees from Silicon Valley Bank in a scheme dubbed “Project Colony” as First Citizens was taking over the failed California lender.
(Bloomberg) — First Citizens Bank & Trust Co. sued HSBC Holdings Plc for allegedly raiding dozens of employees from Silicon Valley Bank in a scheme dubbed “Project Colony” as First Citizens was taking over the failed California lender.
Two weeks after First Citizens acquired SVB on March 27, HSBC poached 42 bankers on Easter Sunday and brazenly took and misused SVB’s confidential, proprietary and trade secret information, according to a complaint filed Monday in federal court in northern California.
David Sabow, who worked in a health-care and technology banking practice at SVB before jumping to HSBC, is identified in the complaint as “the chief architect of this scheme,” which aimed to plunder what was thought to be the “core of SVB’s profitability engine,” according to the complaint. Sabow helped to identify six core US leaders to hire, along with 35 additional SVB professionals, according to the complaint.
HSBC spokesman Matt Ward declined to comment.
Unbeknown to First Citizens, Sabow became an executive of HSBC within days of the British bank’s March 13 acquisition of SVB’s UK unit, according to the complaint, which says he and his new employer immediately engineered a plan to take SVB’s data about clients and competitors, including detailed information about its Life Sciences & Technology division.
“Sabow metaphorically called this scheme ‘Project Colony,’” according to the complaint.
The lawsuit, based on breach of contract and civil conspiracy claims, says First Citizens also considered the SVB group identified by Sabow to be key leaders, anticipating that they would part of an acquisition transition team. HSBC leadership agreed to help orchestrate Sabow’s plan because he said it stood to profit well over $1 billion within the next five years, according to the complaint.
Read More: HSBC Taps SVB Veterans for Healthcare, Tech Banking Practice
HSBC announced the hiring of Sabow and three other bankers on April 11, with Michael Roberts, chief executive officer for the US and Americas at HSBC, saying in a statement the effort “allows us to connect the innovation ecosystem with the size, strength and international network of HSBC.”
Santa Clara, California-based SVB was placed into receivership in early March, becoming the biggest US lender to fail in more than a decade after an unsuccessful attempt to raise capital amid an exodus of cash from the tech startups that formed the backbone of its operations.
The case is First Citizens Bank v. HSBC Holdings, 23-cv-02483, US District Court for the Northern District of California (San Francisco).
(Updates with details of alleged plan in sixth paragraph. An earlier version of the story corrected HSBC’s name.)
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