Silicon Valley Bank – what’s the plan and looking for answers, or looking for answers and what’s the plan . . . ?
March 14, 2023, update: the Federal Reserve Board has announced that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, with the review to be publicly released by May 1. Tate comments – that sounds like a fairly quick review – perhaps it will not be as in-depth.
In some ways this post is strangely similar to a recent December 8, 2022, post pertaining to FTX (Fallout from FTX (and continuing) https://tateattorney.com/2022/12/08/fallout-from-ftx-and-continuing/
Obviously the FTX and Silicon Valley Bank situations are different. Any yet, in both situations many financially sophisticated people, depositors, savers, and investors have lost or will lose money (some a lot of money), or have otherwise been caught up in the collapse. Below are some of my comments currently.
The chorus is the same: what’s the plan and looking for answers, or looking for answers and what’s the plan . . . . (and also how could this happen, and who is to blame, of course)?
Just because something unexpected or negative or bad happens does not by itself mean that someone is legally at fault or liable for wrongdoing or loss, or that there were related reliance, causation, damages, etc. We need more information to evaluate the issues – obviously there needs to be an in-depth investigation (or investigations) by qualified investigators, which presumably is (or are) already in progress. Civil lawsuits will be filed for money damages. Is there a possibility of criminal claims – it is too early to evaluate or to know.
Post-collapse actions, representations and statements also will be evaluated. In the FTX situation significant post-collapse interviews and public statements were made (ill-advisedly in my view) (and apparently without an attorney present, and perhaps without sufficient pre-interview or statement preparation, and possible agreed-upon procedures, questions, and assurances, and possible post-interview review, input and authorization procedures).
The people who are already caught up or who might become caught up in this wear many different hats and hold different positions.
It is also sounding like there might be or already is a need for governmental leadership to publicly provide reassurance (with specifics and evidence, not generalities) about the integrity, safety, trustworthiness, fairness, and governmental oversight and regulation of the banking system and institutions, investment system and institutions, and entity controls and processes.
As the comments and accusations start slinging, remember that being caught up in the situation does not by itself mean or establish legal fault or liability for wrongdoing or loss (i.e., authority, duty, breach, causation, liability, damages, mitigation, etc.) – possible hats and being caught up in the situation include the following people and possible others:
- CEO (obviously);
- CFO (obviously);
- Other CxOs;
- Board/directors, and possible committees (i.e., audit, governance, risk) (obviously);
- People who are in SVB’s financial and banking risk function;
- Possible people within SVB who directly or indirectly acted or did not act;
- Possible people within SVB who made or who did not make representations;
- Possible people who directly or indirectly took or obtained related money or assets;
- Possible people who sold or liquidated SVB stock or other positions;
- Possible other entities and people who became directly or indirectly involved;
- External independent auditors – this is a complicated evaluation, for example: what services were retained and were performed, what standards and procedures applied and/or were or perhaps should have been performed, what “opinions” or other reports were provided, what was known, what was unknown, what perhaps should have been known, who was entitled to rely, causation, etc.;
- General counsel – historically generally not; however, potential general counsel exposure has been expanding in certain circumstances, possibly such as for red flags, entity controls, and related diligence;
- Internal auditors – historically generally not; however, internal audit/auditors were recently disciplined in the Wells Fargo Bank situation;
- Celebrity endorsers (if any) – see my prior post pertaining to FTX https://tateattorney.com/2022/11/23/ftx-cryptocurrency-celebrity-endorser-liability-exposure-in-the-news/;
- Insurers;
- Regulators (such as where were they and what were they doing or not doing in all of this);
- Investor/investment entities and/or advisors or representatives;
- Other banks and lenders, possible guarantors;
- Investors (including the “investment small” people who are really at possible unrecoverable loss);
- Customers, depositors, and savers (including the “financially small” people who are really at possible unrecoverable loss);
- Possible third-party entities with which SVB contracted;
- Professional licensing entities; and
- More: possibly/probably more.
Thank you for reading. Please do pass this blog and blog post and information to other people who would be interested as it is only through collaboration and sharing that great things and success are more quickly achieved.
* * * * * * *
Best to you, David Tate, Esq.
David Tate, Esq. (and inactive CPA)
- Business litigation and disputes – business, breach of contract/commercial, co-owners, shareholders, investors, founders, workplace and employment, environmental, D&O, governance, boards and committees.
- Trust, estate and probate court litigation and disputes – trust, estate, probate, elder and dependent abuse, conservatorship, POA, real property, mental health and care, mental capacity, undue influence, conflicts of interest, and contentious administrations.
- Governance, boards, audit and governance committees, investigations, auditing, ESG, etc.
- Mediator and facilitating dispute resolution:
- Trust, estate, probate, conservatorship, elder and dependent abuse, etc.
- Business, breach of contract/commercial, owner, shareholder, investor, etc.
- D&O, board, audit and governance committee, accountant and CPA related.
- Other: workplace and employment, environmental, trade secret.
Remember, every case and situation is different. It is important to obtain and evaluate all of the evidence that is available, and to apply that evidence to the applicable standards and laws. You do need to consult with an attorney and other professionals about your particular situation. This post is not a solicitation for legal or other services inside of or outside of California, and, of course, this post only is a summary of information that changes from time to time, and does not apply to any particular situation or to your specific situation. So . . . you cannot rely on this post for your situation or as legal or other professional advice or representation, or as or for my opinions and views on the subject matter.
Also note – sometimes I include links to or comments about materials from other organizations or people – if I do so, it is because I believe that the materials are worthwhile reading or viewing; however, that doesn’t mean that I don’t or might not have a different view about some or even all of the subject matter or materials, or that I necessarily agree with, or agree with everything about or relating to, that organization or person, or those materials or the subject matter.
Please also subscribe to this blog and my other blog (see below), and connect with me on LinkedIn and Twitter.
My two blogs are:
http://tateattorney.com – business, D&O, audit committee, governance, compliance, etc. – previously at http://auditcommitteeupdate.com
Trust, estate, conservatorship, elder and elder abuse, etc. litigation and contentious administrations http://californiaestatetrust.com
David Tate, Esq. (and inactive California CPA) – practicing only as an attorney in California.
Like this:
Like Loading...
David W. Tate, Esq. (and inactive CPA) 