SVB Financial Group and two top executives were sued Monday by shareholders, who accused them of hiding how rising interest rates would leave its Silicon Valley bank unit, which failed last week, “specifically more susceptible” to a bank run.
The proposed class action against SVB, Chief Executive Greg Baker and Chief Financial Officer Daniel Beck was filed in federal court in San Jose, California.
It appears to be the first of several potential lawsuits over the demise of the Silicon Valley bank, which was seized by US regulators on March 10 after a surge in deposit withdrawals.
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SVB surprised the market two days ago by disclosing an after-tax loss of $1.8 billion from the sale of investments and plans to raise capital as it scrambled to meet redemption requests.
The Silicon Valley bank held an estimated $209 billion in assets and $175.4 billion in deposits in the largest US bank failure since the 2008 financial crisis.
Its collapse has sparked fears of contagion among other lenders, which cater to technology start-ups and venture capital-backed companies as well as wealthy clients including large regional banks.
In Monday’s lawsuit, shareholders led by Chandra Vanipenta said Santa Clara, California-based SVB failed to disclose how rising interest rates would undermine its business model, and treated it worse than banks with a diverse customer base. Will make
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The lawsuit seeks unspecified damages for SVB investors between June 16, 2021 and March 10, 2023.
SVB on Monday said it will explore remaining strategic options for the company, which is now moving away from its core banking business.
The case is Vanipenta v. SVB Financial Group et al., US District Court, Northern District of California, No. 23-01097. (Reporting by Jonathan Stempel in New York; Editing by Sandra Maler)
The text of this story is published from a wire agency feed without any modification.
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