SVB Financial Group (SIVB) Made False and Misleading Statements in its Offering Documents in Connection with its Acquisition of Boston Private Financial Holdings, Inc. (BPFH)
A shareholder filed a class action on behalf of all persons who acquired SVB Financial Group (NASDAQ: SIVB) common stock pursuant to the Registration and Prospectus issued in connection with SVB’s July 2021 merger with Boston Private Financial Holdings, Inc. (NASDAQ: BPFH) (the “Merger”).
According to the complaint, brought against certain SVB directors and officers and SVB’s independent auditor KPMG, LLP, under the Merger, each share of Boston Private stock was converted into the right to receive $2.10 in cash and 0.0228 shares of SVB common stock.
Leading up to the Merger, SVB concentrated a substantial portion of its investment portfolio to longer-term, fixed-rate securities. Because a rise in interest rates reduces the market value of fixed-rate securities, SVB exposed itself to significant interest rate risk. However, SVB failed to disclose this and other risks, including uninsured depositor risk and liquidity risk. Moreover, the Offering Materials framed potential interest rate increases as a positive development for SVB such that it would increase its interest rate spread, allowing SVB to charge more for its loans and buy higher yielding securities at a rate that would outpace the increased interest it would be obligated to pay on its customer deposits. This turned out to be false, and SVB failed to disclose that higher interest rates would reduce the market value of SVB’s marketable securities, resulting in material unrealized losses from their decline in market value and released losses if they had to be liquidated.
On March 9, 2023, SVB announced a mid-quarter update that it had sold “substantially all of our Available for Sale (AFS) securities portfolio” resulting in an estimated realized post-tax loss of $1.8 billion. The Company’s stock plummeted more than 60% the next day. On March 17, 2023, SVB announced it had filed a voluntary petition under Chapter 11 of the Bankruptcy Code in the U.S. Bankruptcy Court for the Southern District of New York.
What Now: Shareholders who owned Boston Private Financial Holdings, Inc. stock before the Merger and acquired SVB Financial Group pursuant to the Offering Materials may be eligible to participate in the class action against SVB Financial Group. Shareholders who want to act as lead plaintiff for the class should contact Robbins LLP. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. You do not have to participate in the case to be eligible for a recovery. If you choose to take no action, you can remain an absent class member. For more information, click here.
All representation is on a contingency fee basis. Shareholders pay no fees or expenses.
