Silicon Valley Bank’s parent company, SVB Financial Group, and two top executives have been sued by shareholders following SVB’s collapse last Friday. The proposed class action lawsuit accuses SVB of concealing the fact that interest rate hikes would endanger the bank. In addition, anonymous sources say that 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 top 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 13. Reuters reported that the proposed class action lawsuit accuses the bank and top executives of concealing the potential harm that rising interest rates could do to the now bankrupt financial institution. The class action lawsuit was filed in federal court in San Jose, California, and is led by Chandra Vanipenta, who represents SVB shareholders.
Silicon Valley Bank was placed in bankruptcy by the Federal Deposit Insurance Corporation (FDIC) on Friday. On Sunday, the US Federal Reserve, FDIC and Treasury announced that all depositors would be reimbursed. The FDIC then made SVB 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 argues that the bank and executives should have disclosed the fact that Fed Funds rate hikes could weaken the company.
In addition to the lawsuit against SVB, anonymous sources revealed to 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 investigation into the failing bank, and investigators are also looking into the share sales of SVB’s top executives before the collapse. The Justice Department investigation involves prosecutors in San Francisco and Washington, according to the sources.
What do you think will be the outcome of the investigations into the collapse of Silicon Valley Bank? Share your thoughts in the comments section below.
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