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 want to extend a tremendous thank you for your dedication, professionalism, hard work and patient demeanor through this challenging time. It was enjoyable interacting with everyone on your team, this certainly helped while dealing with the situation and working towards resolution.

Dan M.

LATEST NEWS AND ARTICLES

1789752835 Law
September 18, 2026
SEC Sanctions Investment Adviser and Executive for Disproportionate Trade Allocations

The Securities and Exchange Commission (SEC) has determined that the conduct of registered investment advisory firm Barrington Asset Management, and its executive vice-president and chief compliance officer, Gregory Paris, disadvantaged clients and breached their fiduciary duties owed to clients.

1789665543 Law
September 17, 2026
SEC Charges 38 Entities Over Allegedly Fraudulent Adviser Filings

The Securities and Exchange Commission (SEC) charged 38 entities with allegedly making material misrepresentations in Forms ADV filed with the SEC between 2025 and 2026.

1789589290 Law
September 16, 2026
Edelman Financial Engines Secures TRO Against Advisor Who Joined RFG Advisory

Edelman Financial Engines recently secured a temporary restraining order (TRO) against Chad A.