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

This was the best of all possible outcomes and I cannot thank you and the team enough.

Michael S.

LATEST NEWS AND ARTICLES

1783012078 Law
July 2, 2026
Financial Services Institute Backs New Jersey Bill Protecting Independent Advisor Model

The Financial Services Institute (FSI) has urged New Jersey lawmakers to advance legislation that would help preserve the independent contractor status of financial advisors operating in the state.

1782920284 Law
July 1, 2026
Private Credit Funds Face Scrutiny Over Software Exposure Amid Investor Concerns

Private credit fund managers are facing increased scrutiny over their exposure to software companies as investors continue to pull money from the sector during ongoing market volatility.

1782836587 Law
June 30, 2026
FINRA Signals Stronger Enforcement Focus on Reg BI, Excessive Trading, and Best Execution

The Financial Industry Regulatory Authority (FINRA) plans to intensify its enforcement efforts against Regulation Best Interest (Reg BI) violations, excessive trading, options trading, churning, and best execution failures after bringing a record number of retail investor protection cases in 2025, according to ThinkAdvisor.