In Re Silvergate Capital Corporation Securities Litigation

This is a securities class action that was filed on behalf of (a) all persons and entities who purchased or otherwise acquired the publicly traded stock of Silvergate Capital Corporation (“Silvergate”) between November 7, 2019 through March 21, 2023, inclusive (the “Class Period”), and were damaged thereby; and (b) all persons or entities who purchased Silvergate stock in or traceable to Silvergate’s securities offerings conducted on or about January 22, 2021, March 9, 2021 to May 18, 2021, July 29, 2021, and December 7, 2021 (collectively, the “2021 Offerings”), and were damaged thereby. The action alleged violations of the Exchange Act of 1934 and violations of the Securities Act of 1933 against Silvergate, its CEO, Alan Lane, and certain other executives, directors, and underwriters involved in the 2021 Offerings. The Honorable James Edward Simmons Jr. is presiding over the case.

Plaintiffs Have Settled the Action for $37.5 Million

Lead Plaintiffs, Indiana Public Retirement System, Boston Retirement System, Public School Teachers’ Pension & Retirement Fund of Chicago, International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of Ontario, UMC Benefit Board, Inc. and Wespath Institutional Investments LLC, both as administrative trustees of the Wespath Funds Trust (collectively, “Lead Plaintiffs”); and Bucks County Employees Retirement Fund (“Bucks County,” and collectively with the Lead Plaintiffs, “Plaintiffs”), on behalf of themselves and the Settlement Class, have settled the Action for $37,500,000 in cash (the “Settlement”).

On September 3, 2025, the Court held a hearing to consider final approval of the Settlement and other matters. Following the hearing, the Court entered a Judgment approving the Settlement and orders approving the Plan of Allocation and Lead Counsel’s motion for attorney's fees and litigation expenses.

The Settlement Class consists of: (a) all persons and entities who purchased or otherwise acquired the publicly traded common stock of Silvergate Capital from November 7, 2019 through March 21, 2023, inclusive, and were damaged thereby, and (b) all persons and entities who purchased Silvergate Capital securities in and/or traceable to any of Silvergate Capital’s securities offerings during 2021, and were damaged thereby. Excluded from the Settlement Class are: (a) Defendants; (b) directors and officers of Defendants (at all relevant times); (c) Defendants’ Immediate Family Members and their legal representatives, heirs, successors or assigns; and (d) any entity in which any Defendant has or had a controlling interest; provided, however, that no “Investment Vehicle” shall be excluded from the Settlement Class. Also excluded from the Settlement Class are the persons or entities who or which excluded themselves by submitting a request for exclusion from the Settlement Class.

On May 9, 2025, the Parties came to agreement on key monetary and non-monetary terms, which then culminated in a signed term sheet and, ultimately, a Stipulation of Settlement. On May 22, 2025, the Court preliminarily approved the Settlement and authorized notice of the Settlement to be sent to potential Settlement Class Members. The Court conducted the final Settlement Hearing to consider whether to grant final approval to the Settlement and related matters for September 3, 2025. Following the final Settlement Hearing on September 3, 2025, the Court entered a Judgment approving the Settlement and orders approving the Plan of Allocation and Lead Counsel’s motion for attorney's fees and litigation expenses. On August 18, 2026, Plaintiffs submitted their Unopposed Motion for Approval of Distribution Plan to the Court.

More information about the Settlement is available at www.SilvergateSecuritiesLitigation.com.

Background and History of the Litigation

On January 19, 2023, Bernstein Litowitz Berger & Grossmann LLP (“BLB&G”) filed a class action lawsuit in the U.S. District Court for the Southern District of California alleging violations of the federal securities laws by Silvergate Capital Corporation (“Silvergate” or the “Company”), certain of the Company’s senior executives, members of the Company’s Board of Directors, and the underwriters of Silvergate’s secondary public offerings of Class A common stock (the “SPOs”), conducted on or around January 22, 2021, and December 7, 2021.

The complaint alleges that throughout the Class Period, and in connection with the SPOs, Silvergate made false and misleading statements to investors concerning the Company’s robust compliance framework, as well as its anti-money laundering and customer identification programs. Silvergate also assured investors that it maintained sufficient liquidity to cover inflows and outflows on its platform. The complaint alleges that, in truth, the Company’s lax compliance practices enabled its customers to engage in large scale criminal activities, including an egregious fraud perpetrated by FTX and Alameda Research and massive money laundering operations. 

Plaintiffs further allege that the truth began to emerge on November 7, 2022, when Silvergate announced the sudden and unexplained demotion of its Chief Risk Officer, Tyler Pearson—the son-in-law of CEO Alan J. Lane.

Over the ensuing months, news continued to emerge concerning the Company’s lax compliance practices, which allowed its customers to engage in large scale criminal activities, including a massive fraud at FTX and money laundering operations. Then, on January 5, 2023, the Company disclosed that the collapse of FTX 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 alleges that these disclosures caused a precipitous decline in the price of Silvergate shares.

On March 1, 2023, the Court appointed International Union of Operating Engineers, Local No. 793, Members Pension Benefit Trust of Ontario, UMC Benefit Board, Inc. and Wespath Institutional Investments LLC, both as administrative trustees of the Wespath Funds Trust, Indiana Public Retirement System, Boston Retirement System, and Public School Teachers’ Pension & Retirement Fund of Chicago as Lead Plaintiffs and approved their selection of BLB&G as co-Lead Counsel for the Class.

Lead Plaintiffs filed the amended, operative complaint on May 11, 2023. Defendants filed their motions to dismiss the complaint on July 10, 2023, and the parties completed briefing on October 23, 2023. Judge Simmons held a hearing on Defendants’ motions on November 29, 2023. Defendants’ motions remained pending until they were denied as moot, without prejudice to refiling, in light of the Parties’ Settlement.

At the end of June 2024, the Parties held their first mediation session, in what would become extended settlement negotiations conducted through the Honorable Layn Phillips, a former federal judge and well-respected mediator. In connection with the mediation, the Parties exchanged extensive mediation statements, including as to potential damages, and Defendants provided Plaintiffs’ counsel with additional financial information. During that first session, Plaintiffs and Defendants exchanged multiple offers, but a resolution was not achieved. However, the Parties continued to engage in settlement negotiations through Judge Phillips, with Defendants providing Plaintiffs further financial information over the next several months.

On September 18, 2024, Silvergate Capital filed for Chapter 11 bankruptcy protection. The Parties engaged in further negotiations in light of the bankruptcy over the next few months and ultimately agreed to a second in-person mediation session with Judge Phillips on February 6, 2025. The Parties met for a full-day session with Judge Phillips on that date and continued their negotiations. That mediation session was ultimately unsuccessful, but extensive negotiations continued over subsequent months.