Federal investigators investigate collapse of Silicon Valley bank; SVB and top managers sued by shareholders –
Silicon Valley Bank’s parent company, SVB Financial Group, and two executives have been sued by shareholders following SVB’s collapse last Friday. The proposed class action lawsuit accuses the SVB of concealing that rate hikes would put the bank at risk. Additionally, anonymous sources say the US 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 collapse include stock sales by executives
According to reports on March 13, 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. Reuters reported that the proposed class action lawsuit accuses the bank and officers of hiding the potential damage rising interest rates could do to the now-failed financial institution. The class action has been filed in federal court in San Jose, California and is being led by Chandra Vanipenta, representing SVB shareholders.
Silicon Valley Bank was placed under receivership by the Federal Deposit Insurance Corporation (FDIC) on Friday. On Sunday, the US Federal Reserve, FDIC and Treasury Department announced that all depositors would be compensated. The FDIC then converted the 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 alleges that the bank and executives should have disclosed the fact that federal funds rate hikes could weaken the company.
In addition to the lawsuit against SVB, unnamed sources told The Wall Street Journal that the Department of Justice (DOJ) and the 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 stock sales by senior SVB executives before the collapse. Prosecutors in San Francisco and Washington are involved in the DOJ’s investigation, according to the sources.
How do you assess the outcome of the investigation into the collapse of the Silicon Valley Bank? Do share your thoughts in the comment section below.
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