Last week Kevin M. LaCroix reported that the Board of Directors of the Federal Deposit Insurance Corporation had voted unanimously to approve the staff’s request for authorization to file a suit against six former officers and 11 former directors of Silicon Valley Bank and its holding company, SVB Financial Group.  I wasn't surprised because over a year ago, I had pondered  whether the possibility of litigation against the bank's directors and officers.  At the time, I observed that the litigation would likely involve California corporate law:

Because both First Republic Bank and Silicon Valley Bank are California corporations, California corporate law will likely be applied  to suits against directors and officers.  However, the situation is more complex in the case of Silicon Valley Bank because it was a subsidiary of a bank holding company incorporated in Delaware - SVB Financial Group.  Therefore, the applicable law may depend upon whether the director or officer is sued in his or her capacity as a director or officer of the holding company or the bank.  

In a written statement, FDIC Chairman Martin J. Gruenberg blamed the bank's officers and directors for billions of dollars in losses due to alleged mismanagement of the bank's held-to-maturity securities portfolio, the termination of interest-rate hedges on the available for sale securities portfolio, and the issuance of the bank-to-parent dividend.  The Chairman further notes that the bank's directors and officers "simultaneously served in equivalent positions for the holding company, SVBFG".   Because the bank and the holding company are governed by different corporate laws, it should nonetheless be important to distinguish in any litigation whether the alleged mismanagement related to conduct as a director or officer of the bank or as a director or officer of the holding company.