A U.S. federal court has named Norwegian central bank Norges Bank Investment Management and Swedish pension giant AP7 co-lead plaintiffs in a class action lawsuit related to the collapse of Silicon Valley Bank. It is the first time Norges Bank, which also manages Norway’s nearly $1.5 trillion sovereign wealth fund, will lead a class-action lawsuit.
The decision by U.S. District Judge James Donato, presiding in U.S. District Court for the Northern District of California, was primarily based on the institutional investors having “the largest financial interest in the litigation.” According to court documents, Norges and AP7 have suffered losses of approximately $138.4 million and $23.5 million, respectively, from their investments in SVB Financial Group, the bank’s parent holding company.
“We manage money on behalf of all Norwegians. I see it as our duty to take legal action to both maximize our recoveries after the SVB collapse and to signal that this is not acceptable market behavior,” Norges Bank Investment Management CEO Nicolai Tangen said in a statement. “Given our role as co-lead plaintiff, our aim is to maximize recoveries of all investor losses.”
The lawsuit alleges that SVB Financial and certain of its executives misrepresented the strength of the bank holding company’s balance sheet, liquidity and position. The plaintiffs claim the defendants understated and hid the magnitude of the risks the company faced from any decision by the Federal Reserve to raise interest rates. The lawsuit also claims the alleged misrepresentations and omissions caused the bank’s stock to trade at artificially inflated prices.
The lawsuit names as defendants Silicon Valley Bank’s president and CEO, Greg Becker; chief financial officer, Daniel Beck; chief accounting officer, Karen Hon; and chairman Roger Dunbar, along with others at the company director level. Goldman Sachs, Bank of America Securities, Morgan Stanley and Keefe, Bruyette & Woods are also named for allegedly violating the Securities Act.
In choosing Norges Bank and AP7 as co-lead plaintiffs, the court also denied a request by KBC Asset Management, a unit of Belgium’s KBC Corp., to be the lead plaintiff instead.
“[KBC] has not shown that the group of Norges and AP7 is the product of lawyer-driven efforts,” the court’s decision stated. “It bears mention that Norges does not need its losses aggregated to secure lead plaintiff status: standing alone, its losses eclipse those of other movants.”
According to Norges Bank, the Government Pension Fund Global has a dedicated staff of in-house U.S. litigators to oversee the litigation.
Sweden’s largest pension fund, Alecta, which reported losing 19.6 billion Swedish kronor ($1.9 billion) from its investments in Silicon Valley Bank, First Republic Bank and Signature Bank, said in an email that it is a passive class member in the lawsuit.
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Tags: AP7, class action lawsuit, Government Pension Fund Global, KBC Asset Management, KBC Group, lead plaintiff, NBIM, Nicolai Tangen, Norges Bank, Pension Fund, Silicon Valley Bank, SVB Financial Group