KPMG's legal team has filed a motion asking a California federal court to reconsider its June denial of the firm's motion to dismiss a claim in a consolidated class action lawsuit. The suit, filed against the auditor of Silicon Valley Bank Financial Group (SVBFG), along with former directors, underwriters, and officers—including former CEO Greg Becker and ex-CFO Daniel Beck—alleges securities fraud.

The putative class action, consolidated from multiple complaints, was filed on behalf of investors who purchased SVB stock between Jan. 21, 2021, and March 10, 2023, according to an amended complaint filed Jan. 16, 2024. Norges Bank and Sjunde AP-Fonden are named as lead plaintiffs.

In its July 21 motion for reconsideration, the Big Four firm focuses on a June 13 order by Judge Noël Wise, which stated that "the principal issue in this case is whether the defendants made materially false representations or omissions about SVB that induced plaintiffs to buy securities in the bank."

In that wide-ranging opinion, which rejected three dismissal motions including KPMG's, Judge Wise sided with plaintiffs who argued that Silicon Valley Bank misled investors by labeling securities as "held-to-maturity" (HTM), signaling an ability and intent to hold them to maturity, thereby masking potential liquidity issues.

KPMG's motion disputes several assertions in the complaint, notably the claim that it gave the bank a "clean audit" just days before SVB collapsed, losing billions in value. Instead, KPMG points out that the last audit opinion referenced in the complaint was dated March 1, 2022—more than a year before SVB closed on March 10, 2023. The motion also argues that, for the 2020 and 2021 audits, the complaint does not establish that KPMG knew of weaknesses in the bank's finances, nor did it intentionally use the HTM label to hide liquidity problems.

"The fair value of the HTM securities … was reported on the balance sheets and in the notes in the financial statements for 2020 and 2021 for all investors to see," the filing states. "This contradicts plaintiff's conclusory allegation that the HTM classification allowed SVB 'to avoid reporting any declines in the fair value of those securities.'"

The 2023 collapse of Silicon Valley Bank—one of the largest bank failures since the 2008 financial crisis—triggered a run on the bank, rattled markets, and prompted finance leaders to reassess their banking relationships, with many seeking to diversify across multiple institutions.

The failure also drew scrutiny to KPMG's role as auditor and its long-standing client relationship with SVB, sparking renewed debate about auditor independence, as CFO Dive reported. U.S. regulators have long considered limiting auditor tenure for clients.

Weeks before the bank's failure, SVB filed its annual 10-K on Feb. 24, 2023, in which KPMG flagged an issue related to credit losses and unfunded loan commitments as a critical audit matter discussed with the audit committee. However, KPMG did not flag risks concerning SVB Financial Group's ability to continue as a "going concern", as previously reported by CFO Dive.

Shortly after SVB's failure, KPMG defended its work, stating that it conducts audits in accordance with professional standards and that audit opinions are based on evidence available up to and at the date of the opinion.