Illinois Municipal Retirement Fund invested in now-collapsed Silicon Valley Bank

Illinois Municipal Retirement Fund invested in now-collapsed Silicon Valley Bank

Financial reports show IMRF held nearly $8.6 million worth of SVB Financial Group Stock at the end of 2021.

Documents show the Illinois Municipal Retirement Fund may have taken a multi-million dollar hit when Silicon Valley Bank recently collapsed.

The latest report of detailed investments available from the IMRF shows the fund had over $4.5 million invested in 12,621 shares of SVB Financial Group, the parent company of Silicon Valley Bank. Those shares had a fair market value of $8.6 million at the end of 2021 when the stock had a value near $700 per share. 

Incomplete data makes it difficult to say what the IMRF’s exposure was when SVB went belly up.

The most recent SEC filings from IMRF indicated the fund had at least 2,251 shares of SVB at the end of 2022, though that number could be higher. It is also possible that IMRF and other Illinois pension systems had exposure to SVB through index funds or ETFs. IMRF also had millions invested in funds with exposure to FTX, a digital currency exchange that went bankrupt in late 2022.

The collapse of Silicon Valley Bank marked the second-largest bank failure in U.S. history in terms of assets. The aftermath of the collapse has sparked lawsuits from shareholders alleging executives engaged in fraud. It has also sparked debate over further economic ramifications and what the response of the government should be. 

U.S. bank regulators stepped in quickly to assure depositors they will have access to their money, providing what is being called a “backstop” for the failed bank and others in distress. 

Illinois’ pension systems are treading on tenuous financial terrain, without accounting for their shaky choices in investments, as they currently carry $210 billion in state and local pension debt – though ratings agencies such as Moody’s Investors Service estimate the total to be much higher. Risky investments for the state’s deeply troubled pension funds highlight the need for pension reform.

Both taxpayers and state workers must be protected from the potential for bad investments. Add total market losses to most funds’ huge unfunded liabilities, and the public pensions risk insolvency that could leave retirees vulnerable and taxpayers much poorer. 

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