Silicon Valley Bank Fail
Silicon Valley Bank (SVB) is a financial services company based in the United States that provides banking, investment and mortgage services. Founded in 1983, it has grown to become one of the largest banks in the country with over $50 billion in assets. In 2018, however, Silicon Valley Bank experienced significant losses due to a series of failures related to its technology investments.
In February 2018, SVB was revealed as one of five companies involved in an investigation by US authorities into possible accounting fraud at security software maker FireEye Inc., which had been acquired by SVB’s private equity division two years prior. The bank agreed to pay a total of $6 million as part of its settlement with regulators for failing “to maintain appropriate internal controls and procedures relating to its investments” – including high-risk venture capital investments made via FireEye’s subsidiary firm iSight Partners LLC.
The following month saw further losses for SVB when it announced that it would be writing off all remaining balances on loans issued through peer-to-peer lender Prosper Marketplace Inc.. This decision followed reports that some borrowers were misusing funds obtained from these loans; apparently using them for non-business activities such as vacations and luxury goods rather than investing them into their businesses or job creation like they had originally promised when applying for the loan. It was estimated that this write off could cost SVB up to $170 million overall.
More recently, Silicon Valley Bank reported another round of substantial losses after announcing plans to sell off more than $400 million worth of shares held within various venture capital portfolios managed by its asset management arm SVB Capital LLP during Q1 2019 – representing almost 10% of their entire portfolio value at the time. According to reports released shortly afterwards , many investors had allegedly raised concerns about poor performance issues linked with certain VC deals handled by this same division – prompting fears amongst shareholders over potential legal action should further investigations take place down the line .
These problems have undoubtedly caused serious damage both financially and reputationally speaking – leading many experts within finance circles questioning whether Silicon Valley Bank are capable enough going forward manage risky VC investments without putting themselves under too much strain? Only time will tell what happens next at Silicon Valley Banks but if recent events are anything go by then we can expect even more turbulence ahead .
