The FDIC yesterday sued 17 former executives and directors of Silicon Valley Bank, alleging their gross negligence led to the collapse of the institution. The agency is seeking to recover damages for the third-largest bank failure in U.S. history.
In a lawsuit filed in U.S. District Court for Northern California, the FDIC alleged SVB “represents a case of egregious mismanagement of interest-rate and liquidity risks by the bank’s former officers and directors.” The agency said the defendants “ignored clear warnings of risk to the bank’s financial condition, including repeated breaches of the bank’s own interest-rate-risk models, during a period of actual or likely increases in interest rates” to boost SVB’s short-term income and stock price.
“This conduct was negligent, grossly negligent and a breach of the fiduciary duties of care and loyalty owed by each defendant to SVB,” the FDIC said in the lawsuit. “As a result of these breaches, SVB suffered billions of dollars in losses that would have been avoided had defendants properly overseen and managed SVB’s risk.”
Among the defendants named in the lawsuit are former SVB CEO Greg Becker and other former members of the senior management team.
