Silicon Valley Bank Financial Group, the Chief Executive Officer, and Chief Financial officer were sued on Monday by shareholders.
Reuters reported that the shareholders accused them of concealing that the Silicon Bank of Nigeria which collapsed on Friday was “particularly susceptible” to bank run due to rising interest rates.
The federal court in San Jose, California received the proposed class action lawsuit against SVB, CEO Greg Becker, and CFO Daniel Beck.
SVB disclosed that it had a $1.8 billion after-tax loss from investment sales and that it planned to raise capital, as it struggled to meet redemption requests.
Before it failed, Silicon Valley Bank had $175.4 billion in deposits and an estimated $209 billion in assets, making it the biggest U.S. bank failure since the 2008 financial crisis.
In a law suit filed on Monday, shareholders led by Chandra Vanipenta alleged that Santa Clara, California-based SVB had not disclosed the information about how rising interest rates would threaten its business model and leave it worse off than banks with diverse clientele.
It was reported that for SVB investors who purchased stock between June 16, 2021, and March 10, 2023, the complaint demands unspecified damages.
SVB announced on Monday that it will find strategic alternatives for the company’s remaining operations after the removal of its primary banking business.
The case is Vanipenta v SVB Financial Group et al, U.S. District Court, Northern District of California, No. 23-01097.
