The parent company of Silicon Valley Bank, SVB Financial Group, and two senior executives have been sued by shareholders after SVB’s collapse last Friday. The proposed class action accuses SVB of hiding the fact that interest rate hikes would leave the bank in jeopardy. Additionally, anonymous sources say the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are investigating the collapse of Silicon Valley Bank.
Report Says Investigations Into Silicon Valley Bank’s Collapse Include Stock Sales by Senior Executives
SVB Financial Group, the parent company of Silicon Valley Bank, and its CEO Greg Becker and CFO Daniel Beck have been named in a lawsuit, according to reports on March 13th. Reuters reported that the proposed class action accuses the bank and senior executives of hiding the potential harm that rising interest rates could cause to the now-failed financial institution. The class action was filed in federal court in San Jose, California, and is led by Chandra Vanipenta, who is representing SVB shareholders.
Silicon Valley Bank was placed into receivership by the Federal Deposit Insurance Corporation (FDIC) on Friday. On Sunday, the U.S. Federal Reserve, FDIC, and Treasury announced that all depositors would be reimbursed. The FDIC then converted SVB into a bridge bank under its control and opened the financial institution to depositors on Monday. The lawsuit against SVB seeks unspecified damages for shareholders, and Vanipenta contends that the bank and executives should have disclosed the fact that Federal Funds rate hikes could weaken the firm.
In addition to the lawsuit against SVB, unnamed sources disclosed to the Wall Street Journal that the Department of Justice (DOJ) and Securities and Exchange Commission (SEC) are investigating the bank’s collapse. The Journal reported that each federal agency has launched a separate probe into the failed bank, and investigators are also looking into the stock sales of senior SVB executives prior to the collapse. The DOJ’s investigation involves prosecutors in San Francisco and Washington, according to the sources.
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