Gainey McKenna & Egleston Announces A Class Action Lawsuit Has Been Filed Against Silvergate Capital Corporation (SI)

NEW YORK, Jan. 20, 2023 (GLOBE NEWSWIRE) — Gainey McKenna & Egleston announces that a securities class action lawsuit has been filed in the United States District Court for the Southern District of California on behalf of all persons or entities who purchased the securities of Silvergate Capital Corporation (“Silvergate” or the “Company”) (NYSE: SI) between November 11, 2020 and January 5, 2022, both dates inclusive (the “Class Period”).

The Complaint alleges that as a federally regulated banking institution, Silvergate is subject to a wide variety of federal regulations, including anti-terrorism and anti-money laundering. Among other things, the Complaint alleges that those statutes impose requirements on regulated banks to establish Know Your Customer collection protocols, file reports for customer deposits or withdrawals, and create a protocol for suspicious activity that might indicate money laundering or other illegal activity.

The Complaint alleges that throughout the Class Period, Silvergate repeatedly emphasized its “strong regulatory compliance program”—including its anti-money laundering policies and KYC procedures—as a foundation for its growth. The Complaint also alleges that (1) Silvergate stated that it maintained a robust compliance framework; (2) was in compliance with all material aspects of applicable laws and legislation; (33) had established appropriate AML and KYC compliance programs; and (4) was prepared to accommodate deposit inflows and outflows and as such maintained a highly liquid balance sheet. The Complaint also alleges that Silvergate also repeatedly represented that its “vision and advanced approach to compliance” was a foundation for its growth and offered a competitive edge against other institutions who wished to enter the cryptocurrency banking market.

The Complaint further alleges that on January 5, 2023, the Company disclosed that the collapse of FTX had led to a run on Silvergate Bank, causing its deposits to decline by $8.1 billion, or over 68%, over the three months ending in December 2022. The Complaint also alleges that this forced Silvergate to sell off illiquid securities for a loss of over $700 million and to borrow $4.3 billion in short-term advances from Federal Home Loan Banks. All told, disclosures of Silvergate’s deficient compliance procedures and protocols caused the Company’s stock price to decline from $50.96 per share to just $12.57 per share on January 5, 2023. The Complaint further alleges that as a result of Defendants’ actions detailed herein, Plaintiff and other Class members have suffered significant losses and damages.

Investors who purchased or otherwise acquired shares of Silvergate should contact the Firm prior to the February 6, 2023 lead plaintiff motion deadline. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation.  If you wish to discuss your rights or interests regarding this class action, please contact Thomas J. McKenna, Esq. or Gregory M. Egleston, Esq. of Gainey McKenna & Egleston at (212) 983-1300, or via e-mail at [email protected] or [email protected].

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