Silicon Valley bank: Silicon Valley bank parent company, CEO and CFO sued shareholders for fraud
Proposed class action against SVB, chief executive Greg Becker and chief financial officer Daniel Beck was filed in federal court in San Jose, California.
This appears to be the first of many possible lawsuits over the liquidation of Silicon Valley Bank, which US regulators seized on March 10 following a run on deposits.
Two days earlier, SVB surprised the market by reporting an after-tax loss of $1.8 billion from investment sales and that it plans to raise capital in an attempt to meet redemption requests.
The Silicon Valley Bank had about $209 billion in assets and $175.4 billion in deposits before its collapse, the largest bank failure in the US since the 2008 financial crisis.
Its collapse raised fears of contagion among other lenders who also cater to wealthy clients, including tech start-ups and venture capital-backed companies, as well as large regional banks.
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In a lawsuit filed on Monday, shareholders led by Chandra Vanipenta said Santa Clara, Calif.-based SVB failed to disclose how higher interest rates would undermine its business model and make it worse than banks with a different customer base. The lawsuit seeks unspecified damages to SVB investors between June 16, 2021 and March 10, 2023.
SVB said Monday it will explore strategic alternatives to what’s left of the company, now stripped of its core banking business.
Vanipenta v SVB Financial Group et al, U.S. District Court, Northern District of California, no. 23-01097.