FDIC Sues 17 Former Silicon Valley Bank Execs Over Collapse (cnn.com) 3
"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," reports Reuters. The move comes almost two years after Silicon Valley Bank's March 2023 collapse, which shocked financial markets and ended up benefiting big players like JPMorgan Chase. From the report: 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.
"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.
Billions from 17 executives? (Score:3)
Curious how these 17 people collectively have billions. Guess FDIC is setting a high bar to get something if they win?
Re: (Score:2)
I don't think so. There seems to be a lot of assets left in the bankruptcy, this help determine the order in who gets to claim it.
As I recall (Score:2)
As I recall, one of the main issues was that the bank wildly over-invested in long-term, low-interest bonds, and when customers wanted their money the bank had to sell the bonds at significant losses to meet the requests for cash...
SVB simply had no idea what it was doing, and it blew-up in their face... I don't think fraud/malfeasance was a big part of this bank's failure - it was more a case of ignorance on an epic scale.