Trade-secrets lawsuit over HSBC’s SVB hires gets watered down

investmentnews.com:

HSBC Holdings Plc won the dismissal of most claims brought by First Citizens Bank & Trust Co. over the hiring of dozens of Silicon Valley Bank employees following the lender’s collapse last year.

In an order Tuesday, US Magistrate Judge Laurel Beeler granted the bulk of HSBC’s requests to dismiss the allegations but left in place certain claims of trade secret theft, though she expressed some skepticism about them. 

“Maybe discovery will support claims for a nefarious scheme to poach trade secrets and steal a business model, but right now, the allegations against most defendants show only a failed bank and employees decamping to a better business opportunity,” the judge wrote in her order. 

The pretrial fact-finding phase known as discovery is crucial because First Citizens will need to show exactly what secrets it claims were stolen. 

First Citizens, which had acquired Silicon Valley Bank shortly after its failure, alleged in a $1 billion lawsuit filed in San Francisco in May 2023 that HSBC’s David Sabow, a former SVB executive, spearheaded a scheme called “Project Colony” to hire 42 SVB employees and obtain confidential information. It claimed HSBC and employees who defected violated trade secrets laws and breached company contracts governing confidential information and the solicitation of co-workers to leave the company.

Beeler called First Citizens’ first version of its complaint “confusing” and in need of being “cleaned up.” First Citizens then filed an amended complaint, which claimed HSBC executives including Chief Executive Officer Noel Quinn knew of the hiring plan. 

HSBC countered that it “lawfully extended job offers” to former SVB workers whose employment status was up in the air after the First Citizens