| CASE CAPTION |
In re SVB Fin. Grp. Sec. Litig. |
| COURT |
United States District Court for the Northern District of California |
| CASE NUMBER |
3:23-cv-01097-JD |
| JUDGE |
Honorable James Donato |
| PLAINTIFFS |
Norges Bank; Sjunde AP-Fonden; Asbestos Workers Philadelphia Welfare and Pension Fund; Heat & Frost Insulators Local 12 Funds |
| EXCHANGE ACT DEFENDANTS |
Gregory W. Becker; Daniel J. Beck |
| EXCHANGE ACT CLASS |
Purchasers of the common stock of Silicon Valley Bank Financial Group between January 21, 2021, to March 10, 2023, inclusive |
| SECURITIES ACT DEFENDANTS |
Gregory W. Becker; Daniel J. Beck, Karen Hon; Goldman Sachs & Co. LLC; BofA Securities, Inc.; Keefe, Bruyette & Woods, Inc.; Morgan Stanley & Co. LLC; Roger Dunbar; Eric Benhamou; Elizabeth Burr; John Clendening; Richard Daniels; Alison Davis; Joel Friedman; Jeffrey Maggioncalda; Beverly Kay Matthews; Mary J. Miller; Kate Mitchell; Garen Staglin; KPMG LLP |
| SECURITIES ACT CLASS |
Purchasers in the following registered offerings of securities issued by Silicon Valley Bank Financial Group: (i) Series B preferred stock and 1.8% Senior Notes offering on February 2, 2021; (ii) common stock offering on March 25, 2021; (iii) Series C preferred stock and 2.10% Senior Notes offering on May 13, 2021; (iv) common stock offering on August 12, 2021; (v) Series D preferred stock and 1.8% Senior Notes offering on October 28, 2021; and (vi) 4.345% Senior Fixed Rate/Floating Rate Notes and 4.750% Senior Fixed Rate/Floating Rate Notes offering on April 29, 2022. |
Plaintiffs bring this securities fraud class action under the Securities Exchange Act of 1934 (“Exchange Act”) and Securities Act of 1933 (“Securities Act”) against former executives and Board members of Silicon Valley Bank (“SVB” or the “Bank”), underwriters of certain of SVB’s securities offerings, and the Bank’s auditor, KPMG LLP (collectively, “Defendants”). The action centers on Defendants’ misrepresentations and omissions concerning the Bank’s deficient risk management, including its management of liquidity and interest rate risks. A post mortem report from the Federal Reserve ultimately found that these deficiencies were directly linked to the Bank’s collapse in March 2023.
The Exchange Act claims are brought on behalf of all persons and entities who purchased or otherwise acquired the common stock of Silicon Valley Bank Financial Group, the parent company of SVB, between January 21, 2021 and March 10, 2023, inclusive (the “Class Period”), and were damaged thereby. Specifically, Plaintiffs allege that throughout the Class Period, SVB’s CEO Gregory W. Becker and CFO Daniel Beck (the “Exchange Act Defendants”) made false and misleading statements and omissions regarding SVB’s risk management practices, and its ability to hold tens of billions of dollars in “HTM” securities to maturity.
Contrary to the Exchange Act Defendants’ statements, and unbeknownst to SVB investors, SVB suffered from severe and significant deficiencies in its risk management framework and, accordingly, could not adequately assess, measure, and mitigate the many risks facing the Bank, nor properly assess its ability to hold its HTM securities to maturity. As the Federal Reserve has outlined, SVB had a grossly deficient risk management program that posed a “significant risk” to “the Firm’s prospects for remaining safe and sound”; had in place interest rate models that were unrealistic and “not reliable”; employed antiquated stress testing methodologies; and had a liquidity risk management program that threatened SVB’s “longer term financial resiliency” by failing to ensure that the Bank would have “enough easy-to-tap cash on hand in the event of trouble” or assess how its projected contingency funding would behave during a stress event. Plaintiffs further allege that the Exchange Act Defendants were well aware of these deficiencies because, among other things, the Federal Reserve repeatedly warned the Exchange Act Defendants about the deficiencies and the dangers they posed throughout the Class Period.
The Securities Act claims are brought on behalf of all persons and entities who purchased or acquired SVB securities in or traceable to SVB’s securities offerings completed on or about February 2, 2021, March 25, 2021, May 13, 2021, August 12, 2021, October 28, 2021, and April 29, 2022 (the “Offerings”). Plaintiffs allege that the offering documents accompanying these issuances also contained materially false statements regarding the effectiveness of the Bank’s interest rate and liquidity risk management, and its ability to hold its HTM securities to maturity. Through these Offerings, SVB raised $8 billion from investors.
Investors began to learn the relevant truth concealed by Defendants’ misrepresentations and omissions in 2022, when Defendants reported that, contrary to their prior representations, the rising interest rate environment had caused an immediate impact to the Bank’s financial results and future estimates. On March 8, 2023, the relevant truth was further revealed when SVB announced that, due to short-term liquidity needs, the Bank had been forced to sell all of its available for sale securities portfolio for a nearly $2 billion dollar loss, and would need to raise an additional $2.25 billion in funding. Two days later, on March 10, 2023, the California Department of Financial Protection & Innovation closed SVB and appointed the FDIC as the Bank’s receiver. SVB has filed for bankruptcy, and Congress, the DOJ, the SEC, and multiple other government regulators have commenced investigations into the Bank’s collapse and the Exchange Act Defendants’ insider trading.
On January 16, 2024, Plaintiffs filed an amended operative complaint detailing Defendants’ violations of the federal securities laws. The parties are currently engaged in briefing on Defendants’ motions to dismiss.