A scathing Federal Reserve report on the collapse of Silicon Valley Bank released on Friday could be a boon to shareholders suing the defunct lender's executives for allegedly hiding risks that led to its stunning downfall, legal experts said.
took its own share of the blame for SVB's sudden collapse in March but also concluded that "foundational and widespread managerial weaknesses" at the bank left it "acutely exposed" to the one-two punch of rising interest rates and tech sector slowdown, which led to a run on deposits and subsequent government takeover.
SVB was shut down by state and federal banking regulators on March 10. The bank's parent company, SVB Financial Group,But the bank's former executives face a bevy of proposed class action "What we've seen is consistent with what we alleged, which is that this is a failure of risk management at the bank," said attorney Adam Polk, whose law firm has brought a case against SVB entities in California state court.
SVB's bankruptcy limits the available pot of money to the lender's directors and officers liability insurance policy, a type of coverage that protects the personal assets of company leaders.
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