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.  ______________ 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. _________________ SHARAN NIRMUL, 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. JOSEPH BROOKS (Dominic A. Arni, J. Scott Watson, on the brief), Federal Deposit Insurance Corporation, Arlington, VA, for Intervenor- Appellee. 2  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 3 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. 4  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. KPMG is a Delaware limited liability partnership headquartered in New York, 2 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. 5  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). 6 price also increased, and its market capitalization 5 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). 7 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. 8 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 9 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 10 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. 11 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 12 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). 13  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. 14  Under § 10(b) of the ’34 Act 11 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. 15 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). 13While 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 16  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 17 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. 18 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). 19  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. 20 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 21  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). 22 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 23  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). 24 substantially identical to FIRREA’s Succession Clause. 594 U.S. at