Second Circuit Holds That FIRREA’s Succession Clause Does Not Transfer Securities Fraud Claims to the FDIC as Receiver

Second Circuit Holds that FIRREA’s Succession Clause Does Not Transfer Securities Fraud Claims to FDIC Receiver

In Sjunde AP-Fonden v. Fed. Deposit Ins. Corp., No. 25-720, 2026 WL 2416170, at *4 (2d Cir. Aug. 19, 2026), the Second Circuit held that the Federal Deposit Insurance Corporation (the “FDIC”), as receiver, does not succeed to a stockholder’s rights to bring securities fraud claims under § 10(b) of the Securities and Exchange Act and Rule 10b-5.

FIRREA’s Succession Clause provides that the FDIC, as receiver, “succeed[s] to ... all rights, titles, powers, and privileges of the insured depository institution, and 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). Its application to a claim brought by a stockholder has two prerequisites: (1) the claims must assert a right of a stockholder that is (2) with respect to the institution and the assets of the institution. AP-Fonden, 2026 WL 2416170, at *8.

The Second Circuit defined stockholder rights as “rights that are distinctive to stockholders and held by stockholders in their capacity as stockholders” and “derive from ownership of stock.” Id. at *9. However, the court made clear that stockholder rights within the Succession Clause do not include “rights a stockholder holds personally and separately from their ownership of a particular stock or their status as a stockholder.” Id.

The court’s analysis of the securities fraud claims at issue turned on the long-settled Birnbaum rule—which “limits the availability of § 10(b) and Rule 10b-5 private right of action to purchasers and sellers” of securities. Id. at *10 (emphasis added).  Because the right to bring a securities fraud claim turns on the purchase or sale of the security, and not mere ownership, the court concluded that securities fraud claims are “not a stockholder right within the meaning of the Succession Clause.” Id. at *11. Accordingly, the court relied on a straightforward application of the distinction between direct and derivative stockholder claims to hold that the Succession Clause did not deprive the plaintiff of prudential standing to bring its claims and vacated the district court’s dismissal.

‍