The manager of Norway’s huge sovereign wealth fund is stepping into new territory by leading a class action for the first time – joining Sweden’s largest state pension fund in a bid in the US to recoup investment losses on the failed Silicon Valley Bank (SVB).
Norges Bank, which manages the NOK15.6trn (€1.33trn) Government Pension Fund Global (GPFG) via its subsidiary Norges Bank Investment Management (NBIM), announced on Friday afternoon that it had been appointed by a US court to serve as a co-lead plaintiff, along with Swedish state pension fund AP7, in the ongoing US securities class action linked to the now-bankrupt SVB.
“It is the first time that Norges Bank will lead a legal action, a so-called class action, on behalf of a group of investors,” NBIM said.
Sweden’s SEK1.02trn (€90bn) AP7, on the other hand – which revealed today it is also lead plaintiff in a US class action against another failed US niche bank – has led previous class actions seeking recompense for investment losses for itself and other investors, recently winning against US food giant Kraft Heinz.
Nicolai Tangen, NBIM’s chief executive officer, said: “We manage money on behalf of all Norwegians.
“I see it as our duty to take legal action to both maximise our recoveries after the SVB collapse and to signal that this is not acceptable market behaviour,” he said.
The SWF manager said the GPFG and other SVB investors had suffered significant losses on their investments in SVB securities – due to certain misrepresentations of financial conditions and risk management made by the failed bank’s former executives, directors, financial advisers and external auditor.
“Given our role as co-lead plaintiff our aim is to maximise recoveries of all investor losses,” Tangen said.
Norges Bank said the case raised significant concerns about the integrity of the public markets, the governance of large financial institutions, as well as the interests of the investor community more broadly.
Carine Smith Ihenacho, chief governance and compliance officer at NBIM, said: “It is important for us to take legal action where the alleged conduct raises significant concerns about market integrity.”
Smith Ihenacho revealed exactly six months ago that NBIM had just filed a petition to be lead litigator in such a class action.
She said at the time NBIM took part in quite a few litigation processes, mostly class actions but going it alone in some cases.
A year ago, the Oslo-based investment manager signalled in its new multi-year strategy plan that it would escalate its active-ownership work.
Commenting this morning on taking the co-lead with NBIM in the SVB case, AP7 said legal actions were one of its ownership tools to protect the interests of the fund’s savers.
“AP7 takes advantage of the opportunity to pursue litigation through class actions against companies that have violated the law or acted against the interests of shareholders negatively affecting the share price.
“It is part of the active ownership management that deals with demanding responsibility from companies, discouraging irregularities, as well as compensating shareholders,” AP7 said.
The Swedish pension fund also said that back in August it had been named lead plaintiff in a class action against Signature Bank - another in a high-profile trio of US niche bank collapses in the banking crisis earlier this year, the third being First Republic Bank.
“Despite assurances of the opposite, Signature Bank experienced a significant liquidity crisis in March 2023 resulting in one of the largest bank failures in US history,” AP7 said.
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