Silicon Valley Bank parent, CEO, CFO are sued by shareholders for fraud
NEW YORK –
SVB Financial Group and two high executives had been sued on Monday by shareholders who accused them of concealing how rising rates of interest would depart its Silicon Valley Bank unit, which failed final week, “particularly susceptible” to a financial institution run.
The proposed class motion towards SVB, Chief Executive Greg Becker and Chief Financial Officer Daniel Beck was filed within the federal courtroom in San Jose, California.
It seemed to be the primary of many seemingly lawsuits over the demise of Silicon Valley Bank, which U.S. regulators seized on March 10 following a surge of deposit withdrawals.
SVB had shocked the market two days earlier by disclosing a $1.8 billion after-tax loss from funding gross sales and that it deliberate to boost capital, because it scrambled to satisfy redemption requests.
Silicon Valley Bank had an estimated $209 billion of belongings and $175.4 billion of deposits earlier than its collapse, within the largest U.S. financial institution failure for the reason that 2008 monetary disaster.
Its collapse has sparked fears of contagion amongst different lenders that additionally cater to rich shoppers, together with know-how start-ups and enterprise capital-backed corporations, in addition to giant regional banks.
In Monday’s lawsuit, shareholders led by Chandra Vanipenta stated Santa Clara, California-based SVB didn’t disclose how rising rates of interest would undermine its business mannequin, and go away it worse off than banks with totally different shopper bases.
The lawsuit seeks unspecified damages for SVB traders between June 16, 2021 and March 10, 2023.
SVB stated on Monday it is going to discover strategic alternate options for what stays of the corporate, now shorn of its major banking business.
The case is Vanipenta v SVB Financial Group et al, U.S. District Court, Northern District of California, No. 23-01097.
Reporting by Jonathan Stempel in New York; Editing by Sandra Maler
