Following its closure last week, Silicon Valley Bank has been sued by shareholders for fraud, according to Bloomberg. Moreover, the sudden and unexpected collapse of the financial institution represents the largest bank failure since the 2008 financial crisis.
The weekend saw the Federal Reserve announce its intention to aid uninsured depositors at the now-closed bank. Conversely, CNBC reports that at the time of closing, Silicon Valley Bank has nearly $16 billion in unrealized losses.
SVB Sued for Fraud
The collapse of Silicon Valley Banks remains among the most concerning developments in the financial sector in years. Seemingly out of nowhere, the financial institution collapsed in a matter of a week. Thus, spiraling the public in fear of a bank run, and wreaking havoc on bank stocks the following Monday.
Now, Silicon Valley Bank is being sued by shareholders for fraud according to a Bloomberg report. Specifically, the lawsuit is regarding accusations of “mismanaging events that led to its collapse.” Moreover, Bloomberg notes the lawsuit is the “first of what will likely be many securities-fraud lawsuits,” directed at SVB.
Reports began to surface mid-last week, as the bank attempted to raise the capital needed to ensure its survival. Subsequently, it sought a potential sale in hopes of salvaging itself. Conversely, the effort proved ineffective, and the bank was sent into receivership on Friday, as California regulators announced the bank had been closed.
CNBC reports that the Silicon Valley bank maintained nearly $16 billion in unrealized losses. Similarly, reports have signified that trend in US banks potentially proving to be an issue in the near future. Currently, it is unknown if those losses have played a part in the now impending lawsuit.