CVC is a regional bank in Arizona providing banking services to more than 50% of venture capital and start- up companies worldwide. During the pandemic their deposits tripled in size, and CVC purchased long-term Treasury bonds with fixed interest rates and mortgage bonds (low interest rates with supposedly low risk). In May 2021, the Federal Reserve forecast a series of federal fund hikes, and the interest rate hikes continued through 2022. The year 2021 was a successful earnings period, and CVC did not note anything in their financial statements about possible rate hikes. On their February 24, 2023, 10-K report they noted the market volatility/fundraising difficulties for both 2021 and 2022. Their Big Four auditors gave unqualified opinions and claimed they had effective internal controls for both years. But they did not issue a going concern opinion or issue a Critical Audit Matter Report. In March 2023, CVC sold $21 billion of its available-for-sale securities at an after-tax loss of $1.8 billion. There was a run on the bank on March 10, 2023, and the bank was shut down several days later. There are lawsuits against the bank and the CPA firm.

Was there mismanagement on the part of the bank? Will company lose in court?

Will the CPA firm lose in Court?

Pick a side (plaintiff or defendant) and present your case in memo format (company and CPA firm).