Silicon Valley Bank was hit with its first of what will likely be many securities-fraud lawsuits by shareholders, accused of mismanaging events that led to its collapse.
(Bloomberg) — Silicon Valley Bank was hit with its first of what will likely be many securities-fraud lawsuits by shareholders, accused of mismanaging events that led to its collapse.
On Friday, California regulators closed the bank and sent it into receivership. That was after an attempted share sale by the company failed and startups began pulling their funds at the urging of venture capital firms.
The collapse of the lender little-known outside of Silicon Valley has reverberated around the startup world and deepened uncertainty within the financial industry.
SVB’s stock plunged 60% Thursday and its bonds posted record declines. SVB Chief Executive Officer Greg Becker held a conference call with the bank’s clients, including venture capital investors, urging them to “stay calm” in a bid to avoid a run on the bank. Becker is named as a defendant in the suit, as is Chief Financial Officer Daniel Beck.
On Friday, the company’s share sale had failed and it was seeking a rescue as the stock was halted following a deep plunge.
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