Tr?id=566623520170033&ev=PageView&noscript=1

SEC Charges Silvergate Capital and Executives with Misleading Investors

Posted on August 1st, 2024 at 11:59 AM
SEC Charges Silvergate Capital and Executives with Misleading Investors

From the desk of Jim Eccleston at Eccleston Law

The Securities and Exchange Commission (SEC) has filed a complaint against Silvergate Capital Corporation and three former executives, alleging they misled investors about the strength of Silvergate Bank’s Bank Secrecy Act/Anti-Money Laundering compliance program and the monitoring of crypto customers, including the collapsed FTX.

InvestmentNews reports that Silvergate's automated system failed to monitor nearly $1 trillion in transactions on its payments platform, the Silvergate Exchange Network. Despite this failure, former CEO Alan Lane and former Chief Risk Officer Kathleen Fraher assured investors of the system's robustness, even amid concerns about FTX's use of Silvergate accounts in its misconduct.

Gurbir S. Grewal, Director of the SEC’s Division of Enforcement, stated, “At all times, but especially during moments of crises, public companies and their officers must speak truthfully to the investing public. Here, we allege that Silvergate, Lane, and Fraher fell not only woefully, but also fraudulently, short in that regard.” Due to these deficiencies, Silvergate allegedly failed to detect nearly $9 billion in suspicious transfers among FTX and related entities, causing Silvergate’s stock to plummet and wiping out billions in market value for investors.

Silvergate, Lane, and Fraher agreed to settle the SEC’s complaint without admitting or denying the allegations. Silvergate will pay a $50 million civil penalty and faces a permanent injunction. Lane and Fraher agreed to permanent injunctions, five-year officer-and-director bars, and civil penalties of $1 million and $250,000, respectively. These settlements are subject to court approval.

The SEC also alleges that former Chief Financial Officer Antonio Martino misled investors about the company’s losses from expected securities sales following FTX’s collapse. According to the SEC, Martino and Silvergate understated losses and misrepresented the company’s capitalization status as of December 31, 2022. Subsequently, Silvergate announced the winding down of its banking operations, leading to a dramatic fall in its stock value.

 

Eccleston Law LLC represents investors and financial advisors nationwide in securities, employment, transition, regulatory, and disciplinary matters.

Tags: eccleston, eccleston law, sec

Return to Archive

TESTIMONIALS

Previous
Next
Quotes Bigger

I just wanted to say thanks again for preparing and executing my case in such a professional manner. It was a pleasure to watch two professionals take such pride in their work, as well as becoming personally in tune with your client (Me). I would personally recommend you and your firm to anyone.

John O.

LATEST NEWS AND ARTICLES

1777663103 Law
May 1, 2026
Former Texas Advisor Pleads Guilty in Multi-Million Dollar Ponzi Scheme

A former financial advisor and media personality in San Antonio has admitted to defrauding clients in a large-scale Ponzi scheme involving hundreds of investors and millions of dollars, according to reporting by Financial Advisor News.

1777565671 Law
April 30, 2026
SEC Charges Adviser's Estate and Firm in Alleged $1.68 Million Client Fund Misappropriation Scheme

The Securities and Exchange Commission has filed a civil enforcement action against the estate of former investment adviser John R.

1777479103 Law
April 29, 2026
Hightower Advisors Faces Class Action Over Alleged Data Breach

Hightower Holding LLC is facing a class action lawsuit alleging that the firm failed to protect sensitive personal information following a data breach affecting thousands of individuals, according to reporting by Financial Advisor News.