Morgan Lewis  - Silicon Valley Bank Shutdown - What You Need To Know


The fast-moving developments involving Silicon Valley Bank (SVB) and its financial stress are rippling throughout the financial services and emerging business sectors.
The legal and practical issues are complex and raise numerous questions: What does the just-announced FDIC receivership mean for the bank and its affiliates, as well as their customers, creditors, and commercial counterparties? How, if at all, may funds be withdrawn? How are funds in money market accounts and Treasurys treated differently than funds in deposit accounts? Do investment funds and broker/dealers holding customer funds in SVB have obligations arising from the bank’s financial distress? How will the financial distress impact the bank’s counterparty obligations in the broad range of financial contracts and other commercial transactions to which SVB and its affiliates are a party?
Morgan Lewis is well suited to identify and understand these issues and to advise clients on how best to protect their interests. Our SVB Task Force—encompassing partners from our banking regulatory, investment management, restructuring, emerging business, and SEC regulatory practices—stands ready to provide answers and guidance on these and other issues that will arise. 

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The California Department of Financial Protection & Innovation on March 10 declared Silicon Valley Bank insolvent and appointed the FDIC as receiver. To help with the resolution of SVB, the FDIC created the Deposit Insurance National Bank of Santa Clara, which will essentially serve as a bridge bank to facilitate access to SVB deposits insured by the FDIC. Having a large insured depository institution fail without warning is a significant event that has already caused ripples across the financial industry, although many see the risk of serious contagion in the financial sector as relatively low.
In this LawFlash, our lawyers break down some high-level questions that many are asking in this quickly evolving situation.

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