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Silicon Valley Bank Bosses Face Multiple Lawsuits By Angry Customers

The financial world has been shaken by the collapse of Silicon Valley Bank, with the first lawsuits arriving for its top executives. 

Shareholders have filed a class action suit against CEO Greg Becker and CFO Daniel Beck. The filings accuse them of concealing how rising interest rates would make the bank “particularly susceptible” to a bank run. 

In the weeks before SVB’s insolvency, both executives sold millions of dollars worth of shares.

The bank’s collapse has caused turmoil in financial markets, with bank shares sliding globally. 

However, some good news: the FDIC has called former Fannie Mae troubleshooter Tim Mayopoulos to take over the bank’s running. The institution has been recast as Silicon Valley Bank N.A. and remains open for business.

Despite President Joe Biden’s attempts to calm the markets, rating agency Moody’s has placed six U.S. lenders at risk of a downgrade, including First Republic, Western Alliance Bancorp, Intrust Financial Corp., UMB Financial Corp., Zions Bancorp., and Comerica. 

Meanwhile, large U.S. banks are being inundated with customer requests to transfer funds from smaller lenders. JPMorgan Chase, Citigroup, and Bank of America are among the big beasts trying to accommodate customers wanting to move deposits quickly from Silicon Valley Bank and other regional lenders.

While Europe and the U.K. are experiencing some stabilization in the fallout from SVB, shares continue to trend downwards. That momentum will likely carry through the rest of the week.

However, the extra steps banks take to speed up the onboarding process for customers wanting to transfer funds from smaller lenders will hopefully ease the situation for those affected by the collapse of Silicon Valley Bank.