Shareholders of Silicon Valley Bank Financial Group have sued the now-defunct bank and two of its top executives.
The class action lawsuit involves SVB, chief executive Greg Becker, and chief financial officer Daniel Beck. The group launched the lawsuit in a federal court based in San Jose, California, reports show.
Chandra Vanipenta has led the litigation for shareholders of the bank. In it, the lawsuit alleges the three entities withheld information about the knock-on effects of interest rates on the bank, leading to subsequent bank runs.
SVB Collapse amid Liquidity Scramble
The news comes after the collapse of the 16th-largest bank in the United States. US government authorities seized the company’s assets on Saturday after liquidity issues triggered a massive bank run.
SVB shocked its clients and market watchers after revealing a $1.8 billion USD loss of revenues after taxes due to investment sales. The bank later failed to raise sufficient capital to close the fiscal hole.
Just ahead of its collapse, SVB posted just $209 billion in assets and $175.4 billion in deposits. The bank’s failure is the largest since the 2008 financial crisis.
Fears over subsequent collapses have surfaced across the industry, with many tech startups, venture capitalists, and affiliated regional banks mulling potential such possibilities.
In the United Kingdom, HSBC purchased SVB’s British operations for one pound — the same fee Sir Philip Green charged for the remaining shares of defunct retailer British Home Stores (BHS) in 2015.
The news comes just under a week after Silvergate Capital shuttered its banking division over its alleged ties to FTX. The now-defunct crypto trading platform used Silvergate Banking to facilitate transactions just days before filing for bankruptcy.
