Unlike the bank’s depositors, shareholders’ funds aren’t protected by the federal government, but Monday’s suit argues they should be able to recoup their money since it accuses executives of illegally inflating SVB’s stock price.
Topline
A Silicon Valley Bank shareholder filed a lawsuit Monday against the financial firm just days after it collapsed in the biggest bank failure since 2008, marking the first of what will likely be a string of lawsuits against the bank and its top executives for their roles in its collapse.Key Facts
The suit was filed by a shareholder named Chandra Vanipenta, but it seeks class-action status for shareholders, naming the bank itself, CEO Greg Becker and CFO Daniel Beck as defendants.
The plaintiff argues the executives failed to disclose how rising interest rates would impact the bank’s business, claiming it was in a “particularly susceptible” position for a bank run after continually issuing reports suggesting the Federal Reserve’s rate hikes over the last year were not cause for concern.
Doing so meant the executives and the company managed to “artificially” inflate the stock price, the suit alleges.
The Federal Deposit Insurance Corporation fired Becker and Beck after the bank collapsed.
