Norges Bank Investment Management and Swedish pension fund Sjunde AP-fonden (AP7) have reached a settlement with KPMG as part of a class-action lawsuit related to the 2023 collapse of Silicon Valley Bank, according to the fund.
After more than three years of litigating the case in the U.S. District Court for the Northern District of California, KPMG, which was Silicon Valley Bank’s outside auditor, agreed to pay $224.5 million to settle claims brough by AP7 and NBIM, manager of Norway’s $2.3 trillion sovereign wealth fund, the Government Pension Fund Global. The other lead plaintiffs are the Asbestos Workers Philadelphia Welfare and Pension Fund and the Heat & Frost Insulators Local 12 Funds.
The lawsuit alleges that Silicon Valley Bank and KPMG misled investors about the bank’s financial position and risk controls before its collapse in March 2023. The plaintiffs argue that the defendants misrepresented the strength of the bank’s balance sheet, liquidity, and position in the market. The plaintiffs claim the defendants understated and hid the magnitude of the risks the company faced if the Federal Reserve raised interest rates.
The lawsuit argues that KPMG’s “unqualified auditor’s reports” were “false and misleading” because the bank’s consolidated financial statements did not fairly present its financial condition and were not prepared according to Generally Accepted Accounting Principles. It also alleges the bank had serious, known problems with risk management, interest-rate exposure, and access to cash, but continued telling investors that its controls were effective.
The lawsuit also claims the alleged misrepresentations and omissions caused the bank’s stock to trade at artificially inflated prices, and NBIM said the bank’s collapse caused significant losses for it and other investors.
“The settlement is an important first step toward recovering investor losses from one of the largest bank failures in U.S. history,” NBIM Chief Executive Officer Nicolai Tangen said in a statement. “Investor confidence depends on well-functioning markets and on investors’ ability to enforce their rights.”
The settlement is subject to court approval, and the pension funds’ lawsuit against the bank and other defendants is ongoing.
Tags: AP7, KPMG, Norges Bank Invesment Management