The world’s largest sovereign-wealth fund is going after the now-defunct Silicon Valley Bank, its management and the Wall Street advisers that aided its rise, the Wall Street Journal reported. Norges Bank Investment Management, which manages Norway’s $1.5 trillion wealth fund, and other former SVB shareholders attacked the failed bank in a legal filing late Tuesday. The filing accused SVB and its executives of concealing the lender’s ailing health from public view, while also ignoring warnings about risks from rising interest rates. The suit said the bank’s board, its auditor KPMG, and four investment banks that helped it raise money — Goldman Sachs, Bank of America BAC, Keefe, Bruyette & Woods and Morgan Stanley — all “ utterly failed in their role as gatekeepers” and “must be held to account for the harm they caused to investors.” The suit said investors lost more than $24 billion in market value. The filing is the main complaint in a large class-action lawsuit from SVB shareholders, who were wiped out in March 2023, when a rapid bank run led to one of the biggest bank failures in U.S. history. In December Norges was made lead plaintiff in the class action, along with a Swedish pension fund. The suit names three executives, including former SVB Chief Executive Greg Becker, and 12 former board members as individual defendants.
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In related news, New York City is trying to collect more than $2.1 million it says Silicon Valley Bank owes in back taxes from before the California-based regional lender collapsed last year, Bloomberg News reported. In a complaint filed yesterday against the Federal Deposit Insurance Corporation, the receiver for the failed bank, the city cites corporation business tax “deficiencies” for 2017 through 2021 and is also seeking interest and penalties. The city said the FDIC in November denied its request to be paid out of remaining bank assets. “The city has a legitimate tax claim against the SVB and is entitled to collect taxes due,” New York’s lawyers said in the complaint, filed in federal court in Washington. “The FDIC, in its capacity as receiver for SVB, is liable for the claim amount.” The March collapse of Silicon Valley Bank, following a wave of withdrawals by the tech startups and venture capital firms that formed its client base, was the biggest U.S. bank failure in more than a decade and presaged a banking crisis that engulfed several other financial institutions. This month, the parent company of Silicon Valley Bank announced it had struck a deal with key creditors in a step toward resolving its bankruptcy case. The arrangement, which requires court approval, involves forming a new company that would hold valuable assets like the firm’s venture capital arm — SVB Capital — and tax attributes potentially worth billions of dollars, according to court papers.
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