5. What happens to non-deposit accounts or investments in other financial products that were held at or through SVB?
Generally speaking, such products are not insured by the FDIC, and their treatment within the receivership process will vary based on the terms and conditions of the governing agreement and depending on SVB’s role relative to such products.
With respect to money market mutual funds or other securities that SVB swept cash into, the answer depends on the agreement governing the sweep arrangement and the record keeping by SVB, any intermediary such as a securities broker-dealer, and the transfer agent for the money market mutual funds or other securities. Typically, a high priority for the FDIC would be to sell SVB’s custody business to a successor trustee. After this, a successor custodian would likely assume SVB’s duties and rights under your custody agreement and facilitate access to the proceeds of redemptions or sales of these securities just as SVB did. If a purchase of money market mutual funds or other securities failed to settle before SVB collapsed, then the funds would never have been swept and would be treated as insured or uninsured deposits, depending on whether the $250,000 insurance limit had been exceeded. In summary, securities purchased in fully settled transactions held by SVB as the custodian are not lost if all institutions involved documented the requisite legal arrangements properly, but they may be unavailable for a period of time. How long that period will last is not yet clear.