In the California headquarters of Silicon Valley Bank (SVB), shareholders filed a lawsuit against two top executives on Monday for failing to disclose that rising interest rates would make the firm more susceptible to its present problem.
In federal court in San Jose, California, two defendants have been named: CEO Greg Becker and CFO Daniel Beck.
Prior to its bankruptcy, Silicon Valley Bank had an estimated $209 billion in assets and $175.4 billion in deposits, making it the largest U.S. bank failure since the 2008 financial crisis that triggered the Great Depression.
After a surge in deposit withdrawals on March 10, U.S. regulators made the decision to close and foreclose.
Silicon Valley Bank shocked the market two days prior when it revealed a $1.8 billion after-tax loss on the sale of its investments. As it struggles to once again fulfill purchase criteria, the bank plans to raise capital.
Its downfall confirms prior government authorities' worries about the dangers to companies exposed to cryptocurrencies. A number of banks, including Silvergate Bank and Signature Bank, have also been instructed to close due to worries about the spread of the problem to other lenders who cater to wealthy clients, including emerging technology and venture-backed firms and local central banks.
Chandra Vanipenta, one of the plaintiffs in the complaint filed on Monday, claimed that Santa Clara, California-based SVB should have revealed how rising interest rates would threaten its business model and make it less competitive than banks with diverse clienteles.
Unspecified damages are sought for SVB investors between June 16, 2021, and March 10, 2023 in the case.
Silicon Valley Bank U.K. Ltd was yesterday officially bought by HSBC in a deal supported by the Government and the Bank of England. The Banking Act of 2009's authorities, which permit the secure management of financial occurrences without requiring government cash, enable transactions.
