Silicon Valley Bank’s former parent company can’t pursue its $1.7 billion claim against the Federal Deposit Insurance Corp. because some executives made judgments that led to SVB’s bankruptcy, a federal judge ruled Friday.
SVB Financial Group executives, including CFO Daniel Beck and Treasurer Michael Kruse, breached their fiduciary duty by “causing the Bank to take on excessive interest-rate risk and liquidity risk for the benefit of the Holding Company and adversely to the Bank,” said Judge Beth Labson Freeman of the U.S. District Court for the Northern District of California.
The FDIC proved that other executives, including members of the finance and risk committees, knew of the breaches, Freeman said. These breaches were “a substantial factor in causing damages,” she said.
“The holding company chose to run the bank through holding company officers in accordance with the global, enterprise-wide policies, limits, and metrics that the holding company established,” she wrote. “Having made this choice, it must live with the consequences.”
This is the latest in a line of legal rulings related to the March 2023 collapse of Santa Clara, California-based SVB, which heavily catered to the technology sector and had mostly uninsured deposits.
It’s one of the largest bank failures in U.S. history, and one of several in the first half of 2023. The Federal Reserve previously blamed bank management – and its own oversight – for the collapse.
