Lewis Brisbois White Collar Defense Partners Speak with Law360 for Article on Silicon Valley Bank Collapse
Washington, D.C. (March 14, 2023) – Fort Lauderdale Partner Sean Shecter, Washington, D.C. Partner Paul Kisslinger, and Atlanta Partner Steven Lee – all former federal attorneys – recently spoke with Law360 for an article regarding how the social media activity surrounding Silicon Valley Bank's (SVB) collapse will likely play a role in upcoming fraud investigations concerning the bank.
As the article, titled “SVB Flameout May Spur Gov't Probes With Social Media Twist,” explains, investigations into potential stock market manipulation and insider trading are expected to occur following SVB’s demise. Mr. Shecter told Law360 that social media activity will inflame the activities of the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) as they probe for signs of wrongdoing. "This is the first time you've had a run on the bank in a social media era," Mr. Shecter explained. "This was a contagion panic amplified by social media that took the bank down within a day, which makes it very different from '08 and other big bank runs. . . . If I'm a prosecutor, I want to know if any part of this contagion was nefarious. Was anything done that caused market manipulation or was there insider information involved. . . . They're going to feel pressure to at least look into this and try to understand what happened."
Similarly, in discussing the likely elements of upcoming investigations into SVB’s collapse, Mr. Kisslinger told to Law360 that the "SEC will be all in [SVB's] shorts on several fronts. . . . From the corporate side, they'll look at recent company disclosures and determine if what they told investors matched up with what they knew at the time — examining internal emails, memos, witness interviews and testimony. Maybe there is a whistleblower or two. . . . They'll look at insider trading activity. They'll look at disclosures made to auditors and bank regulators. They'll look at corporate governance, internal controls, books and records, etc.”
Moreover, Mr. Lee told Law360 that based on recent history, it is unlikely that the government investigations into SVB’s downfall will result in criminal or civil action. He noted, "None of the companies or executives were prosecuted back in 2008. . . . Question is: Will that be true here?" Mr. Lee further explained that the recent case involving Elon Musk in which a jury quickly cleared him of securities fraud provides insight into the SVB scenario as Musk’s case similarly hinged on social media activity. "Unless you have a smoking gun, these are very difficult cases to prove," Mr. Lee stated.
Mr. Shecter and Mr. Lee serve as co-chairs of Lewis Brisbois’ Government Investigations & White Collar Defense Practice. As former federal prosecutors, they focus on government and internal corporate investigations and complex litigation matters. Mr. Kisslinger serves as chair of Lewis Brisbois’ SEC Enforcement & Litigation Practice. He spent almost two decades with the SEC, most recently as its assistant chief litigation counsel.
Read the full article on Law360 here (subscription may be required).
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