Shareholders of Silicon Valley Bank have filed a lawsuit against SVB Financial Group and two of its top executives CEO, CFO Greg Becker & Daniel Beckon the grounds that they failed to disclose how rising interest rates would make its Silicon Valley Bank subsidiary, which failed last week, "particularly susceptible" to a bank run.
Before its closure, Silicon Valley Bank had an estimated $209 billion in assets and $175.4 billion in deposits, But the bank surprised the depositors and investors by announcing an after-tax loss from investment sales of $1.8 billion and that it intended to raise capital.
The lawsuit that has been filed primarily demands unspecified damages for investors between the time period of June 16, 2021, and March 10, 2023. SVB declared on Monday that it will investigate and curate strategic options for the company's remaining operations after the removal of its primary banking division.
In the industry other lenders that have a wealthy clientele feared a ripple effect in the industry of deposit withdrawal. These included big regional banks, venture capital-backed businesses, and technology start-ups.