Sjunde AP-Fonden v. FDIC

25-720
Sjunde AP-Fonden v. FDIC
In the
United States Court of Appeals
for the Second Circuit
August Term 2025
Argued: October 21, 2025
Decided: August 19, 2026
Docket No. 25-720
SJUNDE AP-FONDEN,
Lead Plaintiff-Appellant,
MATTHEW SCHAEFFER,
Plaintiff,
v.
FEDERAL DEPOSIT INSURANCE CORPORATION, in its capacity as Receiver
for Signature Bank,
Intervenor-Appellee,
JOSEPH DEPAOLO, ERIC HOWELL, FRANK SANTORA, JOSEPH SEIBERT,
SCOTT A. SHAY, VITO SUSCA, STEPHEN D. WYREMSKI, and KPMG LLP,
Defendants-Appellees.*
* The Clerk of the Court is respectfully directed to amend the caption as set forth above.

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______________
Before: LOHIER, Chief Judge, and WESLEY and MERRIAM, Circuit Judges.
Lead Plaintiff-Appellant Sjunde AP-Fonden (“AP7”) appeals from the
judgment of the United States District Court for the Eastern District of New York
(Block, J.). AP7 filed a consolidated class complaint for securities fraud under
§ 10(b) of the Securities Exchange Act of 1934 and Securities Exchange
Commission (“SEC”) Rule 10b-5 against the third-party auditor and several
former directors and officers of Signature Bank (“Signature”), a (now-defunct)
federally insured and publicly traded commercial bank. The Federal Deposit
Insurance Corporation (“FDIC”), as receiver for Signature, intervened in the action
and moved to dismiss for lack of prudential standing and failure to exhaust
administrative remedies. According to the FDIC, it “owns” AP7’s securities fraud
claims because the Succession Clause of the Financial Institutions Reform,
Recovery, and Enforcement Act of 1989 (“FIRREA”) transferred ownership of the
claims to the FDIC, when the latter became Signature’s receiver. The district court
agreed and dismissed AP7’s complaint. We disagree. The Succession Clause does
not apply to AP7’s securities fraud claims. We also conclude that AP7 was not
required to administratively exhaust its securities fraud claims against the third-
party auditor and the former directors and officers, because those claims are not
against Signature or the FDIC as receiver. We VACATE the judgment of the
district court and REMAND.
_________________
S HARAN N IRMUL , Kessler Topaz Meltzer & Check, LLP, Radnor, PA
(Richard A. Russo, Joshua A. Materese, Nathaniel C. Simon,
Kessler Topaz Meltzer & Check, LLP, Radnor, PA; John J. Rizio-
Hamilton, Jeremy Robinson, Alexander McRae Noble, John J.
Esmay, Jonathan D’Errico, Bernstein Litowitz Berger &
Grossmann LLP, New York, NY, on the brief), for Plaintiff-
Appellant.
J OSEPH B ROOKS (Dominic A. Arni, J. Scott Watson, on the brief), Federal
Deposit Insurance Corporation, Arlington, VA, for Intervenor-
Appellee.

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Michael S. Doluisio, Dechert LLP, Philadelphia, PA, for Defendant-
Appellee Joseph DePaolo.
Peter L. Simmons, Fried, Frank, Harris, Shriver & Jacobson LLP, New
York, NY, for Defendant-Appellee Eric Howell.
David B. Massey, Perkins Coie LLP, New York, NY, for Defendant-
Appellee Frank Santora.
Jonathan A. Harris, Harris St. Laurent & Wechsler LLP, New York,
NY, for Defendant-Appellee Joseph Seibert.
Jonathan M. Sperling, Covington & Burling LLP, New York, NY, for
Defendant-Appellee Scott A. Shay.
Michael D. Longyear, Charles T. Spada, Lankler Siffert & Wohl LLP,
New York, NY, for Defendant-Appellee Vito Susca.
Anand Sithian, Crowell & Moring LLP, New York, NY, for Defendant-
Appellee Stephen D. Wyremski.
Richard Marooney, King & Spalding LLP, New York, NY, for
Defendant-Appellee KPMG LLP.
_________________
WESLEY, Circuit Judge:
When a federally insured bank fails, the Federal Deposit Insurance
Corporation (“FDIC”) may be appointed receiver for the failed bank and tasked
with winding down its affairs. Under the “Succession Clause” of the Financial
Institutions Reform, Recovery, and Enforcement Act of 1989 (“FIRREA”), the

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FDIC, upon its appointment as receiver, “shall . . . succeed to . . . all rights . . . of
any stockholder . . . of such institution with respect to the institution and the assets
of the institution.” 12 U.S.C. § 1821(d)(2)(A)(i). The question presented is whether
the FDIC, as receiver, succeeds to an individual’s right to bring a claim for
securities fraud under § 10(b) of the Securities Exchange Act of 1934 and Securities
and Exchange Commission (“SEC”) Rule 10b-5.
In this case, the FDIC was appointed receiver for Signature Bank
(“Signature”), a federally insured and publicly traded commercial bank that New
York banking authorities closed in 2023. Sjunde AP-Fonden (“AP7”) then filed a
consolidated class complaint for securities fraud under § 10(b) and Rule 10b-5
against Signature’s third-party auditor KPMG LLP and seven former Signature
officers and directors. The FDIC intervened and moved to dismiss for lack of
prudential standing and failure to exhaust administrative remedies. The district
court (Block, J., E.D.N.Y.) dismissed the complaint for lack of prudential standing,
because, in its view, the Succession Clause transferred these securities fraud claims
from AP7 to the FDIC as receiver for Signature. In this case, we disagree that the
Succession Clause is so sweeping. We therefore vacate the judgment of the district
court and remand for further proceedings below.

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I. BACKGROUND
Facts and Procedural History
Lead Plaintiff-Appellant Sjunde AP-Fonden (AP7)1 is a Swedish
government agency that operates Sweden’s public pension investment fund. It
filed the instant consolidated class complaint for securities fraud under § 10(b) and
Rule 10b-5 against Defendants-Appellees KPMG LLP (“KPMG”), an American
professional services firm that audited Signature’s financial statements from 2001
to 2023,2 and seven former Signature officers and directors (“the Officers”). The
Officers include several former C-suite executives of Signature, including the
chairman of its board and the managing director of its digital assets banking
group.3 We take the following facts from AP7’s amended consolidated complaint
as true, as we must upon review of the grant of a motion to dismiss.
1 “Sjunde” means “Seventh” in Swedish. “Fonden” means “Fund” in Swedish.
2 KPMG is a Delaware limited liability partnership headquartered in New York,
NY. App’x at 118.
3 The individuals and their respective former positions at Signature during the
class period are as follows: Joseph DePaolo, co-founder, president, and chief executive
officer; Scott A. Shay, co-founder and chairman of the bank’s board; Eric Howell, chief
operating officer; Stephen Wyremski, chief financial officer; Vito Susca, chief
administrative officer; Frank Santora, chief payments officer; and Joseph Seibert,
managing group director and senior vice president of the digital assets banking group.

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Signature was a New York State-chartered and federally insured
commercial bank whose stock publicly traded on the NASDAQ.4 Its collapse in
2023 was one of the largest bank failures in United States history. From its
founding in 2001 until 2017, the bank employed a New York-centric business
strategy primarily focused on serving clients in the commercial real estate sector,
as well as law firms and taxi medallion owners. The strategy depended largely on
earning interest on loans funded through its clients’ cash deposits. The bank’s
clients “primarily consisted of mid-sized companies and wealthy families”
involved in commercial real estate, which held significant deposits at the bank.
App’x at 119.
For years, the bank’s strategy worked. From 2009 until 2016, its revenue
significantly increased and its deposits grew from approximately $7 billion to $32
billion. App’x at 120. From February 2010 until February 2017, the bank’s stock
4 “[C]ommercial banking” includes a variety “of services and credit devices,”
including “the creation of additional money and credit, the management of the checking-
account system, and the furnishing of short-term business loans.” United States v. Phila.
Nat’l Bank, 374 U.S. 321, 326–27 (1963).

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price also increased, and its market capitalization5 expanded from approximately
$1.53 billion to $8.46 billion. Id.
In 2017, however, Signature faced stagnating deposits and declining
revenue, id.; it then made “a major pivot into the nascent cryptocurrency and
blockchain industries,” id. at 123. It launched a digital assets banking group and
a digital payment platform that allowed customers to “instantly settle”
cryptocurrency transactions using cash deposits. Id. at 123–24. In 2019, Signature
began providing banking services, such as cash management, and financing
services, such as loans, to venture capital firms and private equity firms.
Following the change in strategy, the bank’s total deposits again grew
dramatically, by approximately 57% to $63.32 billion in 2020, and 68% to $106.13
billion in 2021. App’x at 125–26. The bank’s total assets reached $118.45 billion in
2021. Id. at 130. Most of the new deposits belonged to a small number of clients,
5 Market capitalization refers to the value of a bank’s outstanding shares (shares
currently held by shareholders), which is calculated by multiplying the total number of
such shares by the stock price. City of Omaha, Neb. Civilian Emps.’ Ret. Sys. v. CBS Corp.,
679 F.3d 64, 69 (2d Cir. 2012) (per curiam).

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and because they exceeded the FDIC’s insurable limit of $250,000 per depositor,
were uninsured.6
As Signature rapidly grew, the FDIC and New York banking regulators
became increasingly concerned about the bank’s liquidity risk profile and warned
the bank about deficiencies in its risk management practices.7 Because the owners
of uninsured deposits may be more likely to withdraw their deposits in a period
of uncertainty regarding a bank’s stability, the high percentage of Signature’s total
deposits that were uninsured raised the specter of a bank run—which occurs when
a large number of clients, fearful about the bank’s stability, withdraw their
deposits in a short period of time.
As more of Signature’s total deposits became concentrated in the accounts
of a small number of cryptocurrency clients, it also became increasingly exposed
to the risk that a downturn in the volatile cryptocurrency industry would eliminate
6 In 2020, 88% of the bank’s total deposits were uninsured, and 55% of its total
deposits belonged to 196 clients. App’x at 127. In 2021, 92% of the bank’s total deposits
were uninsured, 40% of its total deposits belonged to sixty clients, and 14% of its total
assets belonged to four clients. Id.
7 A bank’s liquidity is its ability to meet its financial obligations, including by
making payments to clients and funding its operations, in a timely manner. In re Vivendi,
S.A. Sec. Litig., 838 F.3d 223, 249 (2d Cir. 2016). “The banks’ use of [clients’] funds is
conditioned by the fact that their working capital consists very largely of demand
deposits, which makes liquidity the guiding principle of bank lending and investing
policies . . . .” Phila. Nat’l Bank, 374 U.S. at 326.

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a significant portion of its total deposits. AP7 alleges that alongside the bank’s
growth from 2021 to 2023 (the class period), the Officers and KPMG each made
several false public statements misrepresenting the bank’s liquidity risk profile
and its risk management practices. AP7 contends that those statements artificially
inflated Signature’s stock price and deceived investors who relied on these
statements when deciding to purchase stock.
In 2022, the “Crypto Winter” came; the digital assets industry faltered.
App’x at 112. As clients like FTX went bankrupt, Signature’s financial health also
began to suffer. Eventually, on March 10, 2023, coinciding with the failure of the
similarly crypto-focused Silicon Valley Bank, Signature faced a run on its deposits;
more than 20% of its total deposits were withdrawn in a single day. On March 12,
2023, New York banking authorities concluded that Signature lacked adequate
liquidity to satisfy expected withdrawals and could no longer safely operate. The
same day, they closed the bank and appointed the FDIC as its receiver. By March
28, 2023, the price of Signature stock had plummeted to $0.13 per share, after
reaching a high price of $365.71 per share in 2022.
On March 14, 2023, Plaintiff Matthew Schaeffer initiated a putative class
action for securities fraud in the United States District Court for the Eastern

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District of New York. App’x at 22. A few weeks later, Pirthi Pal Singh filed a
second, substantially identical putative class action in the same district. See
Complaint, Singh v. Signature Bank, No. 1:23-cv-02501-FB-JRC (E.D.N.Y. Mar. 31,
2023). Both complaints initially named Signature as a defendant but the plaintiffs
in each action voluntarily dismissed the claims against the bank, leaving only their
claims against several of the Officers.
Not long after the two actions began, AP7 moved in the first-filed Schaeffer
action, as a member of the putative class, to consolidate the actions, pursuant to
Federal Rule of Civil Procedure 42, and to be appointed lead plaintiff, pursuant to
the Private Securities Litigation Reform Act of 1995. 15 U.S.C. § 78u-4(a)(3)(B)(i).
The district court granted the motion, consolidated the Schaeffer and Singh actions,
and appointed AP7 lead plaintiff, forming the instant consolidated action. Dist.
Ct. Dkt. No. 51. The amended consolidated complaint is the operative complaint
and was the subject of the motion practice below.
In its amended consolidated complaint, AP7 raises three distinct claims for
securities fraud under § 10(b) and Rule 10b-5: (1) a fraudulent misrepresentation

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claim against the Officers under Rule 10b-5(b);8 (2) a scheme-to-defraud and
fraudulent course-of-conduct claim against the Officers under Rules 10b-5(a) and
10b-5(c);9 and (3) a fraudulent misrepresentation claim against KPMG under Rule
10b-5(b).10 The proposed class includes persons and entities who “purchased”
Signature common stock between January 21, 2021 and March 12, 2023 (the class
period), and were damaged as a result. App’x at 106, 258.
The FDIC moved to dismiss the amended consolidated complaint for lack
of prudential standing under Rule 12(b)(6) and for lack of subject matter
jurisdiction due to AP7’s failure to exhaust administrative remedies under Rule
12(b)(1). The district court granted the motion to dismiss for lack of prudential
8 In support of the fraudulent misrepresentation claim against the Officers, AP7
alleges that the Officers disseminated or approved false statements, while knowing or
recklessly disregarding that the statements were misleading.
9 In support of the scheme-to-defraud and fraudulent course of conduct claim
against the Officers, AP7 alleges that the Officers “employed devices, schemes, and
artifices to defraud and carried out a plan, scheme, and course of conduct which operated
as a fraud and deceit” on the purchasers of Signature stock. See Lorenzo v. SEC, 587 U.S.
71, 77–82 (2019) (discussing “scheme liability” claims under Rule 10b-5(a) & (c)); Plumber
& Steamfitters Loc. 773 Pension Fund v. Danske Bank A/S, 11 F.4th 90, 105 (2d Cir. 2021).
10 In support of the fraudulent misrepresentation claim against KPMG, AP7 alleges
that KPMG disseminated false statements—specifically, audit opinions included in
Signature’s 2020, 2021, and 2022 Form 10-Ks, which opined that the bank’s internal
controls over financial reporting were effective and that its financial statements fairly
presented the financial position, cash flow, and operations of the bank—while knowing
or recklessly disregarding that the statements were misleading.

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standing; it concluded that FIRREA’s Succession Clause transferred AP7’s
securities fraud claims to the FDIC, and that, as a result, AP7 was barred from
asserting the claims of a third party, the FDIC. This appeal followed.
The Financial Institutions Reform, Recovery, and Enforcement Act
In 1989, Congress enacted FIRREA “in the wake of the savings and loan
crisis, with the purpose of ‘stem[ming] the financial hemorrhaging resulting from
the large number of failures in the thrift industry.’” Nat’l Credit Union Admin. Bd.
v. Goldman, Sachs & Co., 775 F.3d 145, 148 (2d Cir. 2014) (alteration in original)
(quoting Resol. Tr. Corp. v. Diamond, 45 F.3d 665, 674 (2d Cir. 1995)). FIRREA is
“comprehensive legislation,” O’Melveny & Myers v. FDIC, 512 U.S. 79, 85 (1994),
that aims to put the FDIC “on a sound financial footing,” provide it “funds from
public and private sources to deal expeditiously with failed depository
institutions,” and better equip it to “contain, manage, and resolve failed savings
associations.” Pub. L. No. 101–73, § 101, 103 Stat. 183, 187 (1989). Among its
reforms were new provisions outlining the administrative claims process and
priority scheme, as well as the FDIC’s receivership powers. See 12 U.S.C. § 1821.
One provision—§ 1821(d)(2)—outlines the “[p]owers and duties of [the
FDIC] as . . . receiver.” 12 U.S.C. § 1821(d). They include the ability to “take over
the assets of [the failed institution],” “operate the . . . institution with all the powers

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of the members or shareholders, the directors, and the officers of the institution,”
“conduct all business of the institution,” “collect all obligations and money due
the institution,” “perform all functions of the institution in the name of the
institution,” and “preserve and conserve the assets and property of such
institution.” Id. § 1821(d)(2)(B)(i)–(iv). Other provisions describe the FDIC’s
powers to “place the insured depository institution in liquidation and proceed to
realize upon the assets of the institution,” organize new depository institutions,
merge the institution with another institution, transfer assets without approval,
and pay the institution’s obligations. Id. § 1821(d)(2)(E)–(H).
Another provision of § 1821—the Succession Clause—provides for the
transfer of certain rights and powers from the failed bank and its institutional
stakeholders to the FDIC:
The Corporation shall, as conservator or receiver, and by
operation of law, succeed to—
(i) all rights, titles, powers, and privileges of the insured
depository institution, and of any stockholder, member,
accountholder, depositor, officer, or director of such
institution with respect to the institution and the assets of the
institution; and
(ii) title to the books, records, and assets of any previous
conservator or other legal custodian of such institution.
12 U.S.C. § 1821(d)(2)(A)(i)–(ii) (emphasis added).

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In essence, these powers allow the FDIC, upon its appointment as receiver,
to “step[] into the shoes of the failed bank” and fulfill its “responsibility to marshal
the assets of the bank and to distribute them to the bank’s creditors and
shareholders.” Golden Pac. Bancorp v. FDIC, 375 F.3d 196, 201 (2d Cir. 2004)
(citation omitted).
The Securities Exchange Act
The federal securities laws, including the Securities Exchange Act of 1934
(“the ’34 Act”), “emerged as part of the aftermath of the market crash in 1929.”
Ernst & Ernst v. Hochfelder, 425 U.S. 185, 194–95 (1976); Fed. Hous. Fin. Agency v.
Nomura Holding Am., Inc., 873 F.3d 85, 98 (2d Cir. 2017). These laws “seek to
maintain public confidence in the marketplace,” “by deterring fraud, in part,
through the availability of private securities fraud actions.” Dura Pharms., Inc. v.
Broudo, 544 U.S. 336, 345 (2005). In particular, the ’34 Act “was intended
principally to protect investors against manipulation of stock prices through
regulation of transactions upon securities exchanges . . . and to impose regular
reporting requirements on companies whose stock is listed on national securities
exchanges.” Ernst & Ernst, 425 U.S. at 195.

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Under § 10(b) of the ’34 Act11 and SEC Rule 10b-5,12 “[a]ny person or entity,
including a lawyer, accountant, or bank, who employs a manipulative device or
makes a material misstatement (or omission) on which a purchaser . . . of securities
relies may be liable as a primary violator.” Cent. Bank of Denv., N.A. v. First
Interstate Bank of Denv., N.A., 511 U.S. 164, 191 (1994). We have explained that a
Rule 10b-5 claim remedies “‘the evil . . . of being induced to buy’ without the
disclosure required by the . . . Act.” Clark v. John Lamula Invs., Inc., 583 F.2d 594,
11 Section 10(b) makes it “unlawful for any person . . . by the use of any means or
instrumentality of interstate commerce or of the mails, or of any facility of any national
securities exchange . . . [t]o use or employ, in connection with the purchase or sale of any
security registered on a national securities exchange . . . any manipulative or deceptive
device or contrivance in contravention of such rules and regulations as the Commission
may prescribe as necessary or appropriate in the public interest or for the protection of
investors.” 15 U.S.C. § 78j(b).
12 Promulgated pursuant to the SEC’s rulemaking authority under § 10(b), Romano
v. Kazacos, 609 F.3d 512, 517 (2d Cir. 2010), Rule 10b-5 makes it “unlawful for any person,
directly or indirectly, by the use of any means or instrumentality of interstate commerce,
or of the mails or of any facility of any national securities exchange”:
(a) To employ any device, scheme, or artifice to defraud,
(b) To make any untrue statement of a material fact or to omit
to state a material fact necessary in order to make the
statements made, in the light of the circumstances under
which they were made, not misleading, or
(c) To engage in any act, practice, or course of business which
operates or would operate as a fraud or deceit upon any
person,
in connection with the purchase or sale of any security.
17 C.F.R. § 240.10b-5.

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603 (2d Cir. 1978) (quoting Chasins v. Smith, Barney & Co., 438 F.2d 1167, 1173 (2d
Cir. 1970)).
To state a Rule 10b-5 claim for fraudulent misrepresentation, a plaintiff must
plausibly allege six elements: “(1) a material misrepresentation or omission by the
defendant; (2) scienter; (3) a connection between the misrepresentation or omission
and the purchase or sale of a security; (4) reliance upon the misrepresentation or
omission; (5) economic loss; and (6) loss causation.” Janus Cap. Grp., Inc. v. First
Derivative Traders, 564 U.S. 135, 140 n.3 (2011) (quoting Stoneridge Inv. Partners, LLC
v. Scientific-Atlanta, Inc., 552 U.S. 148, 157 (2008)).
II. DISCUSSION
We review a district court’s grant of a motion to dismiss de novo, accepting
the factual allegations in the complaint as true. Bellin v. Zucker, 6 F.4th 463, 472–73
(2d Cir. 2021); Crupar-Weinmann v. Paris Baguette Am., Inc., 861 F.3d 76, 79 (2d Cir.
2017).13 We review issues of statutory interpretation de novo. Mango v. BuzzFeed,
Inc., 970 F.3d 167, 170 (2d Cir. 2020).
13 While we also review decisions based on undisputed facts in the record de novo
and any findings regarding disputed facts as to a party’s standing to sue for clear error,
only the allegations in the complaint are relevant to our decision here, as we explain
further below. Rajamin v. Deutsche Bank Nat’l Tr. Co., 757 F.3d 79, 81, 84–85 (2d Cir. 2014)
(“We review de novo a decision as to a plaintiff’s standing to sue based on the allegations

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The district court concluded that the Succession Clause transferred AP7’s
securities fraud claims to the FDIC and granted the FDIC’s motion to dismiss for
lack of prudential standing. On appeal, AP7 argues, first, that it has prudential
standing, because FIRREA’s Succession Clause does not apply to its securities
fraud claims. Second, AP7 argues that it was not required to administratively
exhaust its claims.
The FDIC’s motion to dismiss presented the district court with two discrete,
yet interrelated issues: whether AP7 lacks prudential standing because FIRREA’s
Succession Clause transferred ownership of AP7’s securities fraud claims to the
FDIC;14 and if AP7 owns the claims, whether the district court lacked subject
matter jurisdiction over the claims due to AP7’s purported failure to satisfy
FIRREA’s administrative exhaustion requirement.15 The district court decided the
of the complaint and the undisputed facts evidenced in the record. ‘[I]f the court also
resolved disputed facts’ in ruling on standing, ‘we will accept the court’s findings unless
they are ‘clearly erroneous.’” (alteration original) (citations omitted)); Carter v. HealthPort
Techs., LLC, 822 F.3d 47, 57 (2d Cir. 2016).
14 Prudential standing is a “judicially self-imposed” limitation on courts’ exercise of
their jurisdiction. Elk Grove Unified Sch. Dist. v. Newdow, 542 U.S. 1, 11 (2004) (quoting
Allen v. Wright, 468 U.S. 737, 751 (1984)); see Deutsche Bank, 757 F.3d at 84.
15 FIRREA deprives federal courts of subject matter jurisdiction over unexhausted
claims against a failed bank or the FDIC as its receiver. See Bank of N.Y. v. First Millennium,
Inc., 607 F.3d 905, 920–21 (2d Cir. 2010); Carlyle Towers Condo. Ass’n, Inc. v. FDIC, 170 F.3d

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prudential standing issue and the underlying question of the Succession Clause’s
application, and dismissed the complaint for lack of prudential standing.
While the district court was obligated to decide, as a threshold matter,
whether FIRREA’s administrative exhaustion scheme deprived it of subject-matter
jurisdiction,16 on the circumstances of this case, it could not do so without
resolving prudential standing. Both the prudential standing and administrative
exhaustion issues require an answer to the same initial question: who owns the
claims?
If, by operation of the Succession Clause, the FDIC owns the claims, that
ends the inquiry for both issues—AP7 lacks prudential standing to bring the
claims and the administrative exhaustion requirement is irrelevant.17 But if AP7
owns the claims, AP7 has prudential standing to bring them, and the question then
is whether AP7 was required to administratively exhaust them (and if so, whether
301, 307 (2d Cir. 1999) (explaining that FIRREA’s administrative exhaustion requirement
is jurisdictional).
16 Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 94 (1998).
17 If the FDIC owns the claims, it would simply be left to manage their resolution
independently of the administrative process applicable to claims against the failed bank
and the FDIC as its receiver. See First Millennium, Inc., 607 F.3d at 920–21.

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it exhausted them). If AP7 failed to do so as required, the district court would
have been without jurisdiction to entertain the claims.
Because the Succession Clause question underlying the prudential standing
issue is inextricably “intertwined” with the jurisdictional issue of administrative
exhaustion in this way, the district court’s conclusion that the Succession Clause
transferred AP7’s securities fraud claims to the FDIC necessarily meant that the
administrative exhaustion requirement did not apply to those claims. See
Bolivarian Republic of Venezuela v. Helmerich & Payne Int’l Drilling Co., 581 U.S. 170,
178 (2017). Deciding the Succession Clause question—and determining whether
AP7 has the right to bring the securities fraud claims in the first instance—was
therefore logically prior to, and necessary for, answering the jurisdictional
question of administrative exhaustion. See id. at 178–79 (explaining that particular
statutory question of “whether the rights asserted are rights of a certain kind . . . is
a jurisdictional matter that the court must typically decide at the outset of the case”
even when it involves merits issues); see also United States v. Ruiz, 536 U.S. 622, 628
(2002).

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Like the district court, we thus begin by deciding the prudential standing
issue and the underlying question of whether the Succession Clause applies to
AP7’s securities fraud claims.
Prudential Standing
“The doctrine of standing asks whether a litigant is entitled to have a federal
court resolve his grievance.” Hillside Metro Assocs., LLC v. JPMorgan Chase Bank,
Nat’l Ass’n, 747 F.3d 44, 48 (2d Cir. 2014) (quoting Kowalski v. Tesmer, 543 U.S. 125,
128 (2004)).18 The third-party standing rule is a prudential limitation on the federal
courts’ exercise of their jurisdiction. June Med. Servs. LLC v. Russo, 591 U.S. 299,
317 (2020) (plurality opinion) (citing Kowalski, 543 U.S. at 128–29); Warth v. Seldin,
422 U.S. 490, 498 (1975).19 It dictates that “[o]rdinarily, a party ‘must assert his own
legal rights’ and ‘cannot rest his claim to relief on the legal rights . . . of third
18 The doctrine “involves both constitutional limitations on federal-court
jurisdiction and prudential limitations on its exercise.” Warth v. Seldin, 422 U.S. 490, 498
(1975).
19 While in Lexmark International, Inc. v. Static Control Components, Inc., the Supreme
Court expressed some doubt about the proper classification of the third-party standing
rule, it explained that “most” of its cases frame the third-party standing inquiry as an
element of prudential standing and left “consideration of that doctrine’s proper place in
the standing firmament” to “another day.” 572 U.S. 118, 125–26, 127 n.3 (2014). Our own
cases have also placed the rule under the banner of prudential standing. See, e.g., Deutsche
Bank, 757 F.3d at 86.

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parties.’” Sessions v. Morales-Santana, 582 U.S. 47, 57 (2017) (second alteration in
original) (quoting Warth, 422 U.S. at 499); Kowalski, 543 U.S. at 129.
The FDIC argues that the prudential third-party standing rule bars AP7’s
securities fraud claims, because, by operation of the Succession Clause, the FDIC
“owns” the claims. App’x at 277; see Appellee’s Br. at 2. The district court agreed
and dismissed the complaint for lack of prudential standing. We disagree that the
Succession Clause applies to AP7’s securities fraud claims.20
20 The district court analyzed prudential standing as a ground for dismissal under
Rule 12(b)(1), reasoning that it “implicate[s] federal jurisdiction.” Spec. App’x at 6 (first
citing Wight v. BankAmerica Corp., 219 F.3d 79, 90 (2d Cir. 2000); and then citing In re Sofer,
613 F. App’x 92, 92 (2d Cir. 2015) (summary order) (stating that “[p]rudential standing
remains a jurisdictional requirement in our Circuit”)). Our cases are not perfectly clear
on whether Rule 12(b)(1) or 12(b)(6) should govern a motion to dismiss for lack of
prudential standing. Some of our cases suggest that a motion to dismiss for lack of
prudential standing may be brought under either Rule 12(b)(1) or Rule 12(b)(6). E.g., Paris
Baguette Am., Inc., 861 F.3d at 79. Moreover, several of our cases treat prudential standing
as a “jurisdictional” issue in a more general sense, beyond the constitutional and statutory
limitations on subject matter jurisdiction. See, e.g., Lerner v. Fleet Bank, N.A., 318 F.3d 113,
127–30 (2d Cir. 2003) (Sotomayor, J.) (explaining that “standing, whether in its
constitutional or prudential form, [is] a jurisdictional limitation and as such [cannot] be
waived,” and that “prudential considerations of standing are . . . generally treated as
jurisdictional in nature” (citing Thompson v. County of Franklin, 15 F.3d 245, 248 (2d Cir.
1994)), abrogated on other grounds as recognized in Am. Psych. Ass'n v. Anthem Health Plans,
Inc., 821 F.3d 352 (2d Cir. 2016); Hillside Metro Assocs., LLC, 747 F.3d at 50–51 (remanding
with instructions to dismiss the complaint for lack of subject matter jurisdiction where
plaintiff lacked prudential standing under the third-party standing rule); see also In re
Sofer, 613 F. App’x at 92.
In any event, we save further discussion of this question for another day. The
district court’s decision did not turn on the application of Rule 12(b)(1), and our own

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22
1. FIRREA’s Succession Clause
As we have noted, under FIRREA’s Succession Clause, the FDIC, upon its
appointment as receiver for a failed bank, “succeed[s] to . . . all rights, titles,
powers, and privileges of the insured depository institution, and of any
stockholder, member, accountholder, depositor, officer, or director of such
institution with respect to the institution and the assets of the institution.” 12
U.S.C. § 1821(d)(2)(A). The FDIC argues that, as the district court concluded, the
third-party standing rule bars AP7’s securities fraud claims, because the Clause
“assigned” the claims to the FDIC as receiver. Appellee’s Br. at 2. The FDIC
specifically contends that because AP7’s securities fraud claims assert rights of
Signature’s stockholders “with respect to the institution and the assets of the
institution,” 12 U.S.C. § 1821(d)(2)(A), AP7’s claims became the FDIC’s claims
upon its appointment as Signature’s receiver. Appellee’s Br. at 28–29. Because, by
analysis of the underlying Succession Clause question would be the same under either
rule. In other words, even if the district court erred by assessing a non-jurisdictional issue
under Rule 12(b)(1), remand for reconsideration under Rule 12(b)(6) is “unnecessary,”
because “nothing in the analysis of the court[] below turned on the mistake” and “remand
would only require a new Rule 12(b)(6) label for the same Rule 12(b)(1) conclusion.”
Morrison v. Nat’l Austl. Bank Ltd., 561 U.S. 247, 254 (2010); see M.E.S., Inc. v. Snell, 712 F.3d
666, 671 (2d Cir. 2013) (declining to decide whether Rule 12(b)(6) or Rule 12(b)(1) applies,
where materials outside the pleading are not relevant to the dispositive legal issue and
the outcome is the same under either rule).

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23
virtue of the Clause, the FDIC “owns” AP7’s claims, the argument goes, AP7
cannot press the securities fraud claims, which raise the rights of a third party, the
FDIC. Spec. App’x at 8.
The meaning of the Succession Clause is a matter of first impression for this
court. It is common ground that for the Clause to apply to AP7’s claims, two things
must be true: (1) the claims must assert a right “of a[] stockholder” that is (2) “with
respect to the institution and the assets of the institution.” 12 U.S.C. § 1821(d)(2)(A)
(emphasis added). Focusing on the Clause’s second requirement, the district court
interpreted rights “with respect to” the institution and its assets as simply rights
“regarding” the bank and its assets. In doing so, it relied on the reasoning of
another district court in Verdi v. FDIC, No. 1:24-cv-00791(DEH), 2024 WL 4252038,
at *4, 6 (S.D.N.Y. Sept. 20, 2024). Spec. App’x at 10–11 (expressly adopting Verdi’s
holding regarding the Clause’s scope). The district court reasoned that AP7’s
securities fraud claims fall within the Clause’s scope, because the content of the
Officers’ and KPMG’s alleged misrepresentations “relate to Signature and its
assets.” Spec. App’x at 15.21
21 The district court alternatively reasoned that the claims against the Officers
relate to the bank and its assets because damages recovered from the Officers would be
paid, at least in part, from funds available under the directors and officers insurance

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24
We begin and end our analysis with the Clause’s first requirement that the
claims assert a right “of a[] stockholder.” 12 U.S.C. § 1821(d)(2)(A) (emphasis
added).22 AP7 argues that this requirement means that the right at issue must be
one that a stockholder possesses as a stockholder—that is, “by virtue of . . . share
ownership.” Appellant’s Br. at 22–23; Appellant’s Reply Br. at 13. We agree. A
stockholder right, within the meaning of the Clause, is one that is distinctive to
stockholders and therefore derives from the ownership of stock or the
corresponding legal relationship between stockholders and the corporation. This
interpretation follows from the Supreme Court’s decision in Collins v. Yellen, 594
U.S. 220 (2021), the Succession Clause’s neighboring provisions, and the well-
established understanding of stockholder rights under state and federal law.
In Collins, the Supreme Court interpreted the Succession Clause of the
Housing and Economic Recovery Act of 2008 (“HERA”)—a provision that is
policies, which it considered “assets of the bank.” Spec. App’x at 14–15, 15 n.6. In this
regard, the district court’s reasoning was based on its interpretation of those policies,
which were outside the pleadings. See id. at 14–15 & nn. 5–6. Because of the conclusion
we reach here about the meaning of the Succession Clause, we need not consider either
the policies or the district court’s interpretation of them.
22 We save for another day the interpretation of the Clause’s second requirement
that the stockholder right at issue be one that is “with respect to” the institution and its
assets. As the district court noted, this question has divided the other circuits. Contrast
Zucker v. Rodriguez, 919 F.3d 649, 656–57 (1st Cir. 2019), with Levin v. Miller, 763 F.3d 667,
672 (7th Cir. 2014).

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25
substantially identical to FIRREA’s Succession Clause. 594 U.S. at 244–45. HERA’s
Succession Clause similarly provides that the Federal Housing Finance Agency
(“FHFA”) “shall, as conservator or receiver . . . succeed to . . . all rights . . . of the
regulated entity, and of any stockholder . . . of such regulated entity with respect
to the regulated entity and the assets of the regulated entity.” 12 U.S.C.
§ 4617(b)(2)(A)(i). During the 2008 financial crisis, the FHFA was appointed
conservator of Fannie Mae and Freddie Mac, two mortgage financing corporations
that “operate under congressional charters as for-profit corporations owned by
private shareholders.” Collins, 594 U.S. at 226–28. The corporations’ shareholders
subsequently brought suit against the FHFA, asserting that HERA’s restriction on
the President’s power to remove the agency director was unconstitutional. Id. at
235–36.
The Supreme Court rejected the argument that HERA’s Succession Clause
transferred the stockholders’ constitutional claim to the FHFA. Id. at 244–45. In
doing so, the Court explained that HERA’s Succession Clause “effects only a
limited transfer of stockholders’ rights, namely, the rights they hold as stockholders
‘with respect to the regulated entity’ and its assets,” rather than rights shared in
common with non-shareholders. Id. at 245 (emphasis in original). The Court

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26
ultimately held that the Succession Clause “d[id] not transfer to the FHFA the
constitutional right at issue,” because the right asserted by the shareholders “is not
one that is distinctive to shareholders.” Id. at 245–46.
Consistent with Collins’s interpretation of the phrase “rights . . . of any
stockholder,” id., we read stockholder rights, within the meaning of the
substantially identical language in FIRREA’s Succession Clause, as rights that are
distinctive to stockholders and held by stockholders in their capacity as
stockholders.23 We further hold that such rights are those that derive from the
ownership of stock or the corresponding legal relationship between stockholders
and the corporation. On this interpretation, the Succession Clause does not reach
those rights a stockholder holds personally and separately from their ownership
of a particular stock or their status as a stockholder. Our interpretation also
follows from the Clause’s neighboring provisions and the well-established
understanding of stockholder and shareholder rights under state and federal
corporate law.
23 “[W]hen Congress uses the same language in two statutes having similar
purposes, . . . it is appropriate to presume that Congress intended that text to have the
same meaning in both statutes.” Smith v. City of Jackson, 544 U.S. 228, 233 (2005).

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27
Most notably, the provision that immediately follows the Succession
Clause—§ 1821(d)(2)(B)—describes the FDIC’s power to “[o]perate the
institution.” 12 U.S.C. § 1821(d)(2)(B). Extrapolating from the Clause’s transfer of
stockholder rights and powers to the FDIC, it provides that the FDIC may, as
receiver, “take over the assets of and operate the insured depository institution
with all the powers of the . . . shareholders . . . of the institution and conduct all
business of the institution.” 12 U.S.C. § 1821(d)(2)(B)(i).24 Section 1821(d)(2)(B)’s
explication of the FDIC’s power, as receiver, to control the institution’s assets and
operate the institution with the stockholders’ powers reinforces our view of the
Succession Clause. Because § 1821(d)(2)(B) empowers the FDIC to manage the
institution’s assets and operations with all the stockholders’ powers, it makes
sense that its neighboring provision, the Succession Clause, applies, at step one, to
rights and powers that derive from the ownership of stock or the corresponding
legal relationship between stockholders and the corporation. After all, stock
24 Section 1821(d)(2)(A) explains that the FDIC succeeds to all rights of, inter alia,
“any stockholder” of the institution. Section 1821(d)(2)(B) authorizes the FDIC to exercise
all powers of the institution’s “shareholders.” We understand these terms to mean the
same thing, and we use them interchangeably herein. See 11 William Meade Fletcher,
Fletcher Cyclopedia of the Law of Corporations § 5085 (Sept. 2025 update).

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28
ownership is the source of the stockholders’ interest in and control over the
corporation’s assets and operations.
Our view stems from the long-standing principle that, generally speaking,
the stockholders’ interest in and “power of legal control” over the corporation—
including their ability to “govern[] and control[]” it “through the officers whom
they elect”—“is in exact proportion to the amount of [their] stock.” Sawyer v. Hoag,
84 U.S. (17 Wall.) 610, 623 (1873). Indeed, what makes stockholder rights
distinctive, under both state and federal law, is that they derive from the
ownership of stock or the corresponding legal relationship between stockholders
and the corporation. See, e.g., Crane Co. v. Anaconda Co., 39 N.Y.2d 14, 18 (1976)
(explaining that the “conceptual basis for [a shareholder’s] right [to inspect
corporate records] is derived from the shareholder’s beneficial ownership of
corporate assets and the concomitant right to protect [that] investment”); In re
Facebook, Inc., Initial Pub. Offering Derivative Litig., 797 F.3d 148, 157 (2d Cir. 2015)
(discussing a shareholder’s right to bring a derivative action on behalf of the
company, and explaining that “[t]he contemporaneous stock ownership rule . . .
denies a putative derivative plaintiff standing to challenge wrongdoing that
predated the time the plaintiff became a shareholder”); Brookfield Asset Mgmt., Inc.

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29
v. Rosson, 261 A.3d 1251, 1263 (Del. 2021) (discussing a stockholder’s right to bring
a direct action, and explaining that “a stockholder who is directly injured retains
the right to bring an individual action for injuries affecting his or her legal rights
as a stockholder” (emphasis added)); Saba Cap. CEF Opportunities 1, Ltd. v. Nuveen
Floating Rate Income Fund, 88 F.4th 103, 115–16 (2d Cir. 2023) (discussing a
shareholder’s voting rights arising from stock ownership).25
The well-established understanding of stockholder rights under state
corporate law holds particular purchase here. As the Supreme Court has
explained, FIRREA regulates against the backdrop of state corporate law.
O’Melveny & Myers, 512 U.S. at 85, 87 (explaining that FIRREA’s Succession Clause
“places the FDIC in the shoes of the insolvent [savings and loan], to work out its
claims under state law, except where some provision in the extensive framework
25 See also In re Starbuck, 251 N.Y. 439, 445 (1929) (“The right to the dividends is an
incident of the ownership of the stock.”); Campbell v. Am. Zylonite Co., 122 N.Y. 455, 459
(1890) (discussing “[t]he rights and powers arising out of the ownership of corporate
shares,” including the rights to sell shares, vote in corporate elections, approve or
disapprove changes to the relative value of shares, and approve or disapprove
mortgaging of corporate property); Cont’l Sec. Co. v. Belmont, 206 N.Y. 7, 17–18 (1912)
(discussing “the authority of stockholders in the management of business corporations”);
Gollust v. Mendell, 501 U.S. 115, 122–24 (1991) (discussing the stock ownership
requirement for the stockholder right of action for disgorgement of short-swing profits
from insider trading under § 16(b) of the ’34 Act); Zetlin v. Hanson Holdings, Inc., 48 N.Y.2d
684, 685 (1979) (noting “that those who invest the capital necessary to acquire a dominant
position in the ownership of a corporation have the right of controlling that corporation”).

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30
of FIRREA provides otherwise,” and that “matters left unaddressed” in FIRREA’s
“comprehensive and detailed” “scheme are presumably left subject to . . . state
law”); Atherton v. FDIC, 519 U.S. 213, 226 (1997) (holding that uniform federal
common law does not supply a “general standard of care applicable to” federally
insured institutions).26
Moreover, in Resolution Trust Corp. v. Diamond, we specifically explained
that under FIRREA, the Resolution Trust Corporation, a predecessor receiver for
federally insured savings institutions, “like the FDIC in O’Melveny, steps into the
shoes of another entity having claims, rights, powers and causes of action defined
and limited by state law.” 45 F.3d 665, 670 (2d Cir. 1995). In this sense, when it
used the phrase “all rights . . . of any stockholder,” 12 U.S.C. § 1821(d)(2)(A)(i),
26 Accord Langley v. FDIC, 484 U.S. 86, 90–91 (1987) (interpreting word “agreement”
in a provision of the Federal Deposit Insurance Act that governed the enforcement of
certain agreements against the FDIC in its capacity as receiver, based on its common
meaning under commercial and contract law); Burks v. Lasker, 441 U.S. 471, 478 (1979)
(explaining that “in [the] field [of corporate law] congressional legislation is generally
enacted against the background of existing state law,” and that “Congress has never
indicated that the entire corpus of state corporation law is to be replaced simply because
a plaintiff’s cause of action is based upon a federal statute”); Kamen v. Kemper Fin. Servs.,
Inc., 500 U.S. 90, 98, 109 (1991) (stating that courts should rarely “endeavor to fill the
interstices of federal remedial schemes with uniform federal rules,” and explaining that
“[t]he presumption that state law should be incorporated into federal common law is
particularly strong in areas,” like corporate law, “in which private parties have entered
legal relationships with the expectation that their rights and obligations would be
governed by state-law standards”).

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31
Congress “borrow[ed] [a] term[] of art in which are accumulated the legal tradition
and meaning of centuries of practice.” United States v. Hansen, 599 U.S. 762, 774
(2023) (quoting Morissette v. United States, 342 U.S. 246, 263 (1952)). We therefore
presume Congress “kn[ew] and adopt[ed] the cluster of ideas that were attached
to” the term stockholder rights when it enacted FIRREA’s Succession Clause. Id.
The rights that stockholders “hold as stockholders,” Collins, 594 U.S. at 245
(emphasis in original), are therefore those they hold as “persons who are interested
in the operation of the corporate property and franchises” by virtue of their
“undivided interests in the corporate enterprise,” In re Bronson, 150 N.Y. 1, 8 (1896).
The next question, then, is whether AP7’s securities fraud claims assert rights that
are stockholder rights within the meaning of the Clause.
2. AP7’s 10b-5 Claims
AP7’s securities fraud claims do not assert the right of a stockholder but the
right of a stock purchaser under Rule 10b-5. The Birnbaum rule27 limits the
availability of the § 10(b) and Rule 10b-5 private right of action to purchasers and
sellers of securities who suffered economic loss due to misrepresentations in
connection with their purchase or sale. Blue Chip Stamps v. Manor Drug Stores, 421
27 Birnbaum v. Newport Steel Corp., 193 F.2d 461, 464 (2d Cir. 1952).

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32
U.S. 723, 731–35, 737–38 (1975). In doing so, it precludes claims by “actual
shareholders in the issuer who allege that they decided not to sell their shares
because of an unduly rosy representation or a failure to disclose unfavorable
material.” Id. at 737–38. The rule also precludes claims by “shareholders [ and]
creditors . . . who suffered loss in the value of their investment due to corporate or
insider activities in connection with the purchase or sale of securities which violate
Rule 10b-5,” when the purchase or sale of securities was not made by the
shareholders and creditors themselves. Id. at 738. The Birnbaum rule makes clear that
the Rule 10b-5 right of action arises in connection with the purchase or sale of
securities, not mere ownership of the stock in question. In other words, the Rule
10b-5 right of action “is not a property right carried by the shares, nor does it arise
out of the relationship between the stockholder and the corporation.” In re
Activision Blizzard, Inc. S’holder Litig., 124 A.3d 1025, 1056 (Del. Ch. 2015).28
The district court considered AP7’s right of action under Rule 10b-5 to be a
right “in its capacity as a stockholder,” because its “theory of damages for its
28 “A Rule 10b-5 claim under the federal securities laws is a personal claim akin to
a tort claim for fraud. The right to bring a Rule 10b-5 claim is not a property right
associated with shares, nor can it be invoked by those who simply hold shares of stock. .
. . As such, the Rule 10b-5 claim is personal to the purchaser or seller and remains with
that person; it does not travel with the shares.” Activision Blizzard, 124 A.3d at 1056
(citations omitted).

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33
investments both before and after the alleged misrepresentations depend[s] on the
drop in value of its shares.” Spec. App’x at 14 (quoting Verdi, 2024 WL 4252038, at
*6 (cleaned up)). But the fact that a plaintiff’s theory of damages involves the
plaintiff’s stock ownership does not mean that the underlying right asserted by
the plaintiff’s claim attaches to stock ownership and is distinctive to stockholders.
To the extent AP7 or other members of the putative class are stockholders,
their status as such was not the source of the Rule 10b-5 rights at issue and reflects
only their decision to hold the stocks. If AP7 or other members of the putative
class sold their stocks at a loss, such that they were no longer stockholders, they
would still have the same rights of action under Rule 10b-5 as purchasers of
securities. See Clark, 583 F.2d at 603 (holding that the difference between purchase
price and subsequent resale price is a proper theory of damages for Rule 10b-5
claims brought by defrauded stock purchasers who subsequently sold the stock);
Dura Pharms., 544 U.S. at 342 (“If the purchaser sells later after the truth makes its
way into the marketplace, an initially inflated purchase price might mean a later
loss.” (emphasis omitted)). Or, if AP7 or other members of the putative class
happened to have purchased a different form of security than stock, such as a type

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34
of debt security like a note or bond,29 they, again, would have the same rights of
action under Rule 10b-5 as purchasers of securities. What matters is the nature of
the underlying right.
That is quite different from, for example, a shareholder’s right to bring a
derivative action on behalf of the company, which derives from and requires
contemporaneous ownership of stock. See In re Facebook, 797 F.3d at 157 (“The
contemporaneous stock ownership rule . . . denies a putative derivative plaintiff
standing to challenge wrongdoing that predated the time plaintiff became a
shareholder.”).
Because AP7’s Rule 10b-5 right of action is not a stockholder right within
the meaning of the Succession Clause, the district court erred in concluding that
the Clause transfers AP7’s securities fraud claims to the FDIC. And for that reason,
the district court erred in dismissing AP7’s complaint for lack of prudential
standing.
29 See 15 U.S.C. § 78c(a)(10) (defining the term “security” under the ’34 Act to
include, among other things, “any note, stock, treasury stock, security future, security-
based swap, bond, debenture, [or] certificate of interest or participation in any profit-
sharing agreement”); Reves v. Ernst & Young, 494 U.S. 56, 60–61 (1990) (discussing the
definition of “security” under § 3(a)(10) of the ’34 Act).

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Administrative Exhaustion
Because AP7 has prudential standing to bring the securities fraud claims,
one question remains. Was AP7 required to administratively exhaust its securities
fraud claims against KPMG and the Officers? It was not.
FIRREA grants the FDIC, as receiver, the authority to administratively
“determine claims,” 12 U.S.C. § 1821(d)(3)(A), “against a depository institution,”
id. § 1821(d)(5)(A)(i), including those by “the depository institution’s creditors,”
id. § 1821(d)(3)(B)(i); see id. § 1821(d)(3)–(11), (d)(13)(D) (outlining procedures for
administrative determination of claims against bank and the FDIC and for judicial
review of administrative determinations). The FDIC must then distribute
“amounts realized from the liquidation . . . of any insured depository institution”
to pay claims according to the prescribed order of priority. Id. § 1821(d)(11). When
the FDIC disallows a claim, the claimant has the option to request additional
administrative review or file suit on the claim in federal district court.
Id. § 1821(d)(5)(A)(i), 1821(d)(6).

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36
Section 1821(d)(13)(D), the provision that makes administrative exhaustion
a jurisdictional requirement, defines the claims subject to the administrative claim
scheme with particularity:
Except as otherwise provided in this subsection, no court
shall have jurisdiction over—
(i) any claim or action for payment from, or any action
seeking a determination of rights with respect to, the
assets of any depository institution for which the
Corporation has been appointed receiver, including
assets which the Corporation may acquire from itself as
such receiver; or
(ii) any claim relating to any act or omission of such
institution or the Corporation as receiver.
12 U.S.C. § 1821(d)(13)(D)(i)–(ii).
The FDIC argues that AP7 needed to administratively exhaust its claims
against KPMG and the Officers because although the claims are not brought
against the bank or the FDIC as receiver, they nonetheless relate to acts of
Signature. Appellee’s Br. at 60–61. This argument is squarely foreclosed by our
decision in Bank of New York v. First Millennium, Inc., a case the FDIC fails to cite,
in which we interpreted § 1821(d)’s scope and held that the procedural
requirements of FIRREA’s administrative claim scheme apply only to claims
against the failed institution, or against the FDIC as receiver. 607 F.3d 905, 920–21

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37
(2d Cir. 2010) (explaining that § 1821(d) “establishes administrative procedures for
bringing claims against institutions for which the FDIC is receiver” (emphasis
added)); see also Resol. Tr. Corp. v. Elman, 949 F.2d 624, 627 (2d Cir. 1991) (explaining
that FIRREA “provides an administrative scheme for adjudicating claims . . .
against the institution for which the [FDIC’s predecessor] has become receiver”
(emphasis added)). In doing so, we rejected an overly broad, “out of context”
interpretation of § 1821(d)(13)(D)(ii) that would “deprive courts of jurisdiction
over any claim involving the FDIC’s ‘act or omission,’ even a claim not directly
against the FDIC.” First Millennium, 607 F.3d at 920–21. We instead explained that
§ 1821(d)(13)(D)(ii) bars “only claims that could be brought under the
administrative procedures of § 1821(d), not any claim at all involving the FDIC.”
Id. at 921.
First Millennium is instructive. There, the Bank of New York, as trustee for
the NextCard Credit Card Master Note Trust, brought an interpleader action
against the FDIC as receiver for the failed bank that created the trust “to generate
money to lend to credit card holders,” and against owners of notes issued by the
trust. First Millennium, 607 F.3d at 908–09. Both the FDIC and the noteholders
asserted claims to the funds held by the trust. We concluded that the noteholders’

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38
claim against the trust was “not an administrative claim, nor could it have been
one,” because, “[t]hey h[e]ld notes issued by . . . an independent and still solvent
entity,” they were “not creditors of [the failed bank],” and “they assert[ed] no
claims against either that failed institution or against the FDIC.” Id. at 920.
Here, AP7 did not need to exhaust its securities fraud claims against the
Officers or KPMG because they are not claims against Signature. AP7’s claims do
not name Signature as a defendant, do not seek to impose liability on Signature,
and seek recovery only from the individual Officers and KPMG. See First
Millennium, 607 F.3d at 920–21; see also Am. Nat’l Ins. Co. v. FDIC, 642 F.3d 1137,
1144–45 (D.C. Cir. 2011) (concluding that administrative exhaustion is not required
where plaintiff “allege[s] that [defendant], not the FDIC-as-receiver or [the failed
bank], itself committed the tortious acts for which they claim relief”).30 AP7 was
therefore not required to administratively exhaust its claims against the Officers
or KPMG.
30 Our analysis here concerns only the claims before us. We take no position on
whether the administrative exhaustion requirement would apply to third-party claims
for contribution or indemnification that former directors and officers may bring against
a failed bank, or claims based on imputed liability, under legal theories such as
respondeat superior or agency principles, that a plaintiff may bring against a failed bank,
in addition to claims against third parties. See Fed. R. Civ. P. 14(a)(1) (“A defending party
may, as third-party plaintiff, serve a . . . complaint on a nonparty who is or may be liable
to it for all or part of the claim against it.”).

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39
We are also unpersuaded by the FDIC’s argument that the constituent
Schaeffer and Singh complaints’ inclusion of claims against Signature at the time of
their filing means that the district court lacked subject matter jurisdiction over the
Schaeffer and Singh actions at the outset and thereafter over the consolidated action.
Appellee’s Br. at 60. Even assuming the district court’s subject matter jurisdiction
over the consolidated action depends on the complaints in the constituent actions
in this way,31 the Schaeffer and Singh complaints nonetheless also included claims
against individual former officers at the time of their filing. As relevant here,
§ 1821(d)(13) strips jurisdiction over any unexhausted “claim relating to any act or
omission” of Signature or the FDIC and any unexhausted “claim or action for
payment from . . . the assets of” Signature, but it does not necessarily strip
31 We take no position on this issue and note only that it is not entirely clear under
our caselaw. Additionally, the consolidation order and the record do not specify the
precise extent of the consolidation and, in particular, the extent to which the consolidated
complaint was intended to supersede the prior individual pleadings. See Gelboim v. Bank
of Am. Corp., 574 U.S. 405, 413 n.3 (2015) (“Parties may elect to file a ‘master complaint’
and a corresponding ‘consolidated answer,’ which supersede prior individual
pleadings.”); Hall v. Hall, 584 U.S. 59, 77 (2018) (“District courts enjoy substantial
discretion in deciding whether and to what extent to consolidate cases. . . . [C]onstituent
cases retain their separate identities at least to the extent that a final decision in one is
immediately appealable by the losing party.” (citation omitted)). But see Cole v. Schenley
Indus., Inc., 563 F.2d 35, 38 (2d Cir. 1977) (stating that notwithstanding the filing of a
consolidated complaint, “[w]e must . . . consider the jurisdictional basis of each complaint
separately”).

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jurisdiction over an entire action where a complaint presents some claims that did
not need to be administratively exhausted and others that did. Contrast 12 U.S.C.
§ 1821(d)(13)(D)(i) (stripping jurisdiction over any unexhausted “claim or action for
payment from . . . the assets of” Signature of the FDIC) (emphasis added)), with id.
§ 1821(d)(13)(D)(ii) (stripping jurisdiction over any unexhausted “claim relating to
any act omission” of Signature or the FDIC (emphasis added)). Otherwise, the
“claim or action” language would be superfluous. See Exxon Mobil Corp. v.
Allapattah Servs., Inc., 545 U.S. 546, 554 (2005) (discussing how some “statutory
prerequisites for federal jurisdiction . . . can be analyzed claim by claim”).
In any event, even if the Schaeffer and Singh complaints’ initial inclusion of
the claims against Signature created a jurisdictional defect with respect to those
actions that implicated the district court’s jurisdiction over the consolidated action,
the subsequent dismissal of those claims in the constituent actions and the filing
of the amended consolidated complaint cured it. See Hain Celestial Grp., Inc. v.
Palmquist, 607 U.S. 421, 428 (2026) (“If a district court ‘cures’ a jurisdictional defect
prior to final judgment, then the court of appeals is not required to vacate that
judgment even if, at some earlier point in the case, the district court lacked
jurisdiction.”); Royal Canin U.S.A., Inc. v. Wullschleger, 604 U.S. 22, 35–36 (2025)

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(“The amended complaint becomes the operative one; and in taking the place of
what has come before, it can either create or destroy jurisdiction.”). We therefore
conclude that AP7 did not run afoul of FIRREA’s administrative exhaustion
requirement, and the district court’s subject matter jurisdiction over the
consolidated action was sound.
CONCLUSION
For the reasons above, we VACATE the judgment of the district court and
REMAND for further proceedings consistent with this opinion.

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