PacWest Allegedly Failed to Disclose Interest-Rate Hikes’ Impact

PacWest Bancorp investors saw the value of their stock drop steeply as reports pointed to its alleged vulnerability in an environment of high interest rates, according to a proposed class action.

PacWest had downplayed the impact of interest rate increases on its subsidiary Pacific Western Bank, a regional bank, and correspondingly overstated the stability of its deposit base, investor Eric Tan says. He filed his complaint Monday in the US District Court for the Central District of California.

Those statements propped up its stock price and constituted securities fraud, he says. The bank’s subsequent hobbling, including a liquidity crisis and ...