Silicon Valley Bank Parent Company, CEO and CFO Are Sued

SVB Financial Group and two top executives have been sued by shareholders over the collapse of Silicon Valley Bank, as global stocks continued to suffer on Tuesday despite assurances from US president Joe Biden.

The bank’s shareholders accuse SVB Financial Group chief executive Greg Becker and chief financial officer Daniel Beck of concealing how rising interest rates would leave its Silicon Valley Bank unit "particularly susceptible" to a bank run.

The proposed class action was filed on Monday in the federal court in San Jose, California.

It appeared to be the first of many likely lawsuits over the demise of Silicon Valley Bank (SVB), which US regulators seized on 10 March after a surge of deposit withdrawals.

The news came as shock waves from the collapse of SVB pounded global bank stocks further on Tuesday, with calls for calm from Biden and other policymakers doing little to reassure markets and prompting some analysts to rethink their outlook on interest rates.

In Monday's lawsuit, shareholders led by Chandra Vanipenta said Santa Clara, said California-based SVB failed to disclose how rising interest rates would undermine its business model, and leave it worse off than banks with different client bases.

SVB had surprised the market two days earlier by disclosing a $1.8bn after-tax loss from investment sales and that it planned to raise capital, as it scrambled to meet demands from customers who wanted to access their deposits.

SVB had an estimated $209bn worth of assets and $175.4bn worth of deposits before its collapse, in the largest US bank failure since the 2008 financial crisis.

Its collapse has sparked fears that other banks could be vulnerable to rising interest rates through an over-exposure to falling bond prices.

The lawsuit seeks unspecified damages for SVB investors between 16 June 2021 and 10 March 2023.

SVB said on Monday it will explore strategic alternatives for what remains of the company, now shorn of its main banking business.

The FDIC on Monday named Tim Mayopoulos, the former chief of Fannie Mae, as the chief executive officer of Silicon Valley Bank. According to a report, a statement sent by Mayopoulos to clients said the bank is "conducting business as usual".

(Source: The Guardian)