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A philanthropist couple has reached an agreement to resolve their $7 million breach of fiduciary duty allegations against the now-failed First Republic Bank. George Miller and Janet McKinley informed a California federal judge that they reached a deal during a private mediation session.

Settlement Agreement and Court Proceedings

Miller and McKinley, along with the Federal Deposit Insurance Corp. (FDIC), acting as receiver for First Republic Bank, filed a proposed order on Wednesday. The order states that they have agreed to vacate the upcoming scheduled hearings and stay the action for 30 days while the $7 million settlement agreement is finalized.

First Republic $7M Settlement : Background of the Case

The retired couple initiated their action last year, alleging that one of First Republic's investment managers, Samuel Carl Schoner, invested the entirety of their funds into the failed bank's stock. They claimed Schoner ignored repeated instructions to sell the stock when the bank was on the verge of collapse, causing losses of more than $7 million.

According to the complaint, most of the couple's money lost by Schoner — a First Republic senior managing director and wealth manager — was held in a fund that provided scholarships and support for underserved transfer students to attend the University of California, Berkeley.

Claims of Non-Disclosure and Risk Management

Miller and McKinley also claimed that the defendants never disclosed the risks of the investments, including those that ultimately led to First Republic's failure. They argued that Schoner's mismanagement directly contributed to their substantial financial losses.

First Republic $7M Settlement : Arbitration and Further Actions

Last August, the couple alerted the court that they were voluntarily dismissing their claims against Schoner to refile and have them addressed in arbitration before the Financial Industry Regulatory Authority (FINRA). This strategic move aimed to resolve their grievances more effectively through arbitration.

The $7 million settlement highlights the significant impact of First Republic Bank's failure and the fiduciary responsibilities financial managers hold towards their clients.