Less than a week after regulators closed down Silicon Valley Bank, its shareholders filed a lawsuit.
A group of Silicon Valley Bank (SVB) investors had filed a class action lawsuit against the collapsed bank, its chief executive officer Greg Becker, and chief financial officer Daniel Beck over fraudulent acts.
A complaint filed in federal court in San Jose, California, on March 13th stated that the bank and the executives allegedly violated federal securities laws by concealing information about the bank’s interest rates, exposing the SVB to a bank run risk.
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Reuters Business reports that the shareholders believe the executives failed to disclose how raising interest rates would significantly affect the bank’s operations.
SVB Financial Group and two top executives were sued by shareholders who accused them of concealing how rising interest rates would leave its Silicon Valley Bank unit, which failed last week, susceptible to a bank run.
This lawsuit is one of the first filed in court since regulators closed the bank on March 10th. Shortly before its shutdown, SVB declared a massive $1.8 billion after-tax loss from investment sales. It also revealed the plans to raise capital to meet redemption requests.
SVB collapse is the largest bank failure in US history since the 2008 financial crisis. The bank had approximately $209 billion in assets and $175.4 billion in deposit funds just before its wind-down.
The fall of the bank significantly affected the crypto industry. USD Coin (USDC) de-pegged from the dollar after Circle, the company behind it, announced that it had more than $3 billion of deposits with the financial institution.