FDIC sues 17 former Silicon Valley Bank executives over collapse
CNN
The FDIC sued 17 former executives and directors of Silicon Valley Bank on Thursday, seeking to recover billions of dollars for alleged gross negligence and breaches of fiduciary duty that caused the bank’s March 2023 collapse, one of the largest US banking failures.
(Reuters) — The FDIC sued 17 former executives and directors of Silicon Valley Bank on Thursday, seeking to recover billions of dollars for alleged gross negligence and breaches of fiduciary duty that caused the bank’s March 2023 collapse, one of the largest US banking failures. In a complaint filed in San Francisco federal court, the FDIC, in its capacity the bank’s receiver, said the defendants ignored fundamental standards of prudent banking and the bank’s own risk policies in letting the bank take on excessive risks to boost short-term profit and its stock price. The FDIC faulted the bank’s overreliance on unhedged, interest rate-sensitive long-term government bonds such as US Treasuries and mortgage-backed securities, as rates looked set to — and eventually did — rise. It also objected to the payment of a “grossly imprudent” $294 million dividend to its parent that drained needed capital “at a time of financial distress and management weakness” in December 2022, less than three months before its demise. “SVB represents a case of egregious mismanagement of interest-rate and liquidity risks by the bank’s former officers and directors,” the complaint said. The defendants include former Chief Executive Gregory Becker, former Chief Financial Officer Daniel Beck, four other former executives and 11 former directors.
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