KPMG Must Face Expanded Investor Fraud Claim Over SVB Collapse
By CU Today Staff —
SAN JOSE, Calif.—A federal judge has allowed investors in failed Silicon Valley Bank to expand their securities class action against KPMG LLP, finding they sufficiently alleged the accounting firm ignored warning signs while serving as SVB’s outside auditor.
U.S. District Judge Noël Wise on Wednesday granted a request by lead plaintiffs Norges Bank and Swedish pension fund Sjunde AP-Fonden, or AP7, to add a Section 10(b) Exchange Act claim against KPMG, according to Law360.
The ruling adds to KPMG’s exposure in litigation stemming from SVB’s March 2023 collapse. The investors previously asserted a Securities Act claim against KPMG based on unqualified audit reports covering SVB’s 2020 and 2021 financial statements. The court said in a June 2025 ruling that investors alleged KPMG certified that SVB’s financial statements fairly presented its condition, that its internal controls were effective and that the audits complied with Public Company Accounting Oversight Board standards. Judge Wise rejected KPMG’s earlier attempt to dismiss that claim.
The new claim goes further by alleging KPMG acted with the state of mind required for securities fraud. Law360 reported Wise concluded the investors had sufficiently alleged KPMG ignored red flags as SVB’s auditor. Earlier court records detail the underlying warning signs, including alleged weaknesses in SVB’s liquidity and interest-rate risk management, unreliable risk models, deficiencies flagged by Federal Reserve supervisors and questions about whether tens of billions of dollars of securities were properly classified as held to maturity. The court noted last year that KPMG had audited SVB since 1994.
Norges Bank and AP7 were appointed co-lead plaintiffs in 2023 and are seeking recovery for investors who suffered losses when SVB collapsed. Norges Bank Investment Management said at the time that the litigation alleged misrepresentations by SVB executives, directors, financial advisers and its outside auditor. SVB, which had approximately $212 billion in assets when it failed, was closed by California regulators in March, 2023.
Originally reported by CU Today.