FDIC Sues 17 Ex-SVB Leaders for Negligence

The Federal Deposit Insurance Corporation (FDIC) has filed a lawsuit against 17 former executives and directors of Silicon Valley Bank (SVB), alleging gross negligence and breaches of fiduciary duty that contributed to the bank's collapse in March 2023. The suit highlights a $294 million dividend paid to SVB's parent company shortly before the bank's failure, which the FDIC described as 'grossly imprudent' given the bank's financial distress. The lawsuit accuses the former leadership of disregarding prudent banking standards and engaging in risky financial practices, particularly with interest rate-sensitive assets, despite warnings from regulators. Among the defendants are former CEO Gregory Becker and CFO Daniel Beck, with some defendants asserting their actions were misrepresented and that they provided sound risk management advice. The FDIC is seeking to recover billions in damages, emphasizing the egregious mismanagement that led to one of the largest bank failures in U.S. history. Following SVB's collapse, which also triggered the downfall of other banks, the FDIC sold its assets to First Citizens BancShares.