SAN FRANCISCO – First Citizens Bank & Trust has sued HSBC Holdings for allegedly raiding dozens of employees from Silicon Valley Bank (SVB) 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 bank executives on Easter Sunday and brazenly took and misused SVB’s confidential, proprietary and trade secret information, according to a complaint filed on Monday in federal court.
Mr David Sabow, who worked in a healthcare 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”.
Mr Sabow helped to identify six core leaders in the United States to hire, along with 35 additional SVB professionals, according to the complaint.
Unbeknown to First Citizens, Mr Sabow became an executive of HSBC within days of the British bank’s March 13 acquisition of SVB’s British unit, according to the complaint, which said he and his new employer immediately engineered a plan to take SVB’s data on 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, said First Citizens also considered the SVB group identified by Mr Sabow to be key leaders, anticipating that the group would be part of an acquisition transition team. HSBC leadership agreed to help orchestrate Mr Sabow’s plan because he said it stood to profit well over US$1 billion (S$1.35 billion) within the next five years, according to the complaint.
SVB was placed under 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 technology start-ups that formed the backbone of its operations. BLOOMBERG
