FDIC files lawsuit against Silicon Valley Bank execs, directors
The Federal Deposit Insurance Corp. filed a lawsuit against 17 former executives and directors of Silicon Valley Bank that alleges gross negligence and breaches of fiduciary duty tied to the bank’s March 2023 failure.
The lawsuit, filed in U.S. District Court for the Northern District of California, is seeking billions of dollars from the defendants, including former CEO Gregory Becker and five other executives. The suit alleges that the executives and directors ignored fundamental banking standards and Silicon Valley’s risk policies by, among other things, overrelying on unhedged, interest rate-sensitive long-term government bonds.
“SVB represents a case of egregious mismanagement of interest-rate and liquidity risks by the bank’s former officers and directors,” the lawsuit claimed.
The FDIC also objected to the decision to pay a $294 million dividend to the bank’s holding company in late 2022, a move that depleted capital “at a time of financial distress and management weakness.”
“SVB represents a case of egregious mismanagement of interest-rate and liquidity risks by the bank’s former officers and directors,” the complaint said.
Lawyers for Laura Izurieta, the bank’s former chief risk officer, told CNN it was “outrageous” to make her a defendant, saying that she provided sound risk management advice before leaving the bank in April 2022, well before the bank’s collapse.
Becker’s lawyer was traveling and unable to comment, a representative told CNN. Attorneys for the other defendants did not immediately respond to CNN’s requests for comment.
First Citizens BancShares in Raleigh, N.C., bought Silicon Valley Bank from the FDIC.