Silicon Valley Bank, its CEO Greg Becker, and CFO Daniel Beck are facing a class action lawsuit for failing to disclose the potential risks of future interest rate hikes on its business.
Filed in the U.S. district court for the Northern district of California, the lawsuit seeks unspecified damages for those who invested in SVB between June 16, 2021, and March 10, 2023.
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The lawsuit, led by Chandra Vanipenta on behalf of shareholders, alleges that some of SVB’s quarterly and annual financial reports did not account for warnings from the Federal Reserve about interest rate hikes.
The lawsuit specifically cites annual reports for 2020 through 2022, stating that they “understated the risks posed to the company by not disclosing that likely interest rate hikes, as outlined by the Fed, had the potential to cause irrevocable damage to the company.”
Furthermore, the lawsuit claims that SVB failed to disclose that it was susceptible to a bank run if its investments were negatively impacted by rising interest rates. The collapse of Silicon Valley Bank has caused concern among small businesses and individuals with deposits at the financial institution, with the Biden administration guaranteeing all SVB deposits above the insured limit of $250,000 per account.
Related: Losses in SVB Financial Group? Sonn Law Group Invites Investors to Contact the Firm to Discuss Options
Silicon Valley Bank was established as the “go-to” spot for venture capitalists seeking financial partners that were more open to unconventional business proposals than its bigger, more established peers. Venture capitalists set up their accounts at Silicon Valley Bank just as the tech industry started its boom and then advised the entrepreneurs they funded to do the same. However, this cozy relationship ended when the bank disclosed a $1.8 billion loss on low-yielding bonds purchased before interest rates began to spike last year, causing a run on deposits.
If you invested in SVB between June 16, 2021, and March 10, 2023, you may be eligible to participate in this class action lawsuit seeking damages. Contact Sonn Law Group today to discuss your legal options and potential compensation. Our experienced attorneys have a track record of success in complex financial litigation and can help you navigate the legal process.