KeyBank allegedly “made materially false and misleading statements” about its liquidity that harmed investors when the truth came out and caused abrupt major drops in Key’s stock price, attorneys from Brager Eagel & Squire claimed Tuesday in a class action lawsuit.
Reacting to the news Wednesday, National Community Reinvestment Coalition President and CEO Jesse Van Tol released the following statement:
“I wish I could say that I’m surprised to hear KeyBank has been accused of duping its shareholders. But the bank’s leadership repeatedly broke its promises to me and our member organizations who were counting on KeyBank to keep its promises to marginalized communities in recent years.
“The allegations in this new lawsuit – that KeyBank misled its investors about something as central as the long-term soundness of its liquidity – make me wonder: What else is KeyBank hiding?”
NCRC severed ties with KeyBank in late 2022 after discovering that it had become the worst major mortgage lender for Black people in the country and appeared to be engaged in redlining across several of its major markets. The bank had previously partnered with NCRC and its members to forge a community benefits agreement that helped it win approval for a merger that dramatically expanded its market share, then failed to fulfill those commitments while dramatically hiking dividend payments to insiders. The bank initially disputed NCRC’s findings in the press, then agreed that the numbers merit an independent audit amid shareholder pressure on the matter.
NCRC has since urged regulators to downgrade KeyBank’s Community Reinvestment Act rating, which would force the company to improve its lending performance before it could pursue various expansions of its business including the opening of new branches.