• SVB Financial Group, the parent company of Silicon Valley Bank, and two senior executives have been sued by shareholders over the bank’s collapse last Friday.
• The proposed class action accuses SVB of hiding the fact that interest rate hikes could lead to its failure.
• Anonymous sources say the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) are both investigating SVB’s collapse, which includes stock sales by senior executives.
Silicon Valley Bank Collapse
The sudden collapse of Silicon Valley Bank on Friday has sparked an investigation by federal agencies, as well as a lawsuit from shareholders against SVB Financial Group—the parent company of Silicon Valley Bank—and two senior executives: CEO Greg Becker and CFO Daniel Beck.
The proposed class action lawsuit accuses SVB of hiding the potential harm that rising interest rates could cause to the now-failed financial institution from its investors. Filed in federal court in San Jose, California, it seeks unspecified damages for shareholders and is led by Chandra Vanipenta.
Investigations By Federal Agencies
According to an anonymous source who spoke with the Wall Street Journal, both the U.S. Department of Justice (DOJ) and Securities and Exchange Commission (SEC) are conducting separate investigations into SVB’s collapse—including looking into stock sales made by senior executives prior to its failure. The DOJ’s investigation involves prosecutors in San Francisco and Washington D.C., according to the same source.
FDIC Receivership & Reimbursement
On Sunday, the U.S Federal Reserve, FDIC, and Treasury announced that all depositors would be reimbursed after FDIC placed SVB into receivership on Friday then converted it into a bridge bank under their control on Monday–opening it up for depositors again immediately afterwards.
While these investigations are still ongoing, all depositors have been granted reimbursement thanks to government intervention via FDIC receivership–allowing them access once more to their accounts just three days after Silicon Valley Bank failed suddenly last week