SVB Financial Trust Loses $1.7 Billion Claim Against FDIC

A federal judge ruled that SVB Financial Trust, the former parent company’s successor, cannot recover about $1.7 billion held from Silicon Valley Bank after its 2023 collapse, finding that its executives’ decisions to pursue higher profits through long-term bonds and mortgage-backed securities contributed to the losses. The decision, issued by U.S. District Judge Beth Labson Freeman in San Jose, held the holding company responsible for the outcomes of the investment strategy it pursued under enterprise-wide policies. Freeman rejected the trust’s defenses that directors were shielded by business judgment or that losses stemmed solely from the FDIC’s asset-disposal actions. The SVB failure was precipitated by rising interest rates that produced more than $4.5 billion in losses in the bank’s investment portfolio and triggered a run on deposits, many of which were uninsured. The ruling adds to the ongoing fallout from one of the largest U.S. bank collapses in 2023 and clarifies accountability for the bank’s management decisions.