Federal judge rules Silicon Valley Bank executives contributed to 2023 collapse

A federal judge has ruled that Silicon Valley Bank’s leadership was directly responsible for the bank’s spectacular implosion in March 2023, rejecting the argument that criticizing their decisions amounts to Monday-morning quarterbacking. US District Judge Beth Labson Freeman denied a $1.71 billion claim filed by a trust representing SVB Financial Group against the FDIC, finding that the executives’ heavy bets on long-term government bonds and mortgage-backed securities weren’t just unlucky calls. They were negligent ones. The ruling strips away executive protections The decision carries a particularly sharp edge because Judge Freeman rejected the business judgment rule, a legal shield that typically protects corporate officers from liability for decisions that simply turn out badly. Freeman found that SVB’s board didn’t just tolerate excessive risk. It actively encouraged it. The ruling also puts the holding company on the hook for consequences flowing from its own policies, a finding that closes one potential escape route for the corporate parent to distance itself from the bank’s failures. A bank that tripled in size and forgot about risk SVB’s assets swelled from roughly $71 bi...