(Reuters) - The FDIC on Thursday sued 17 former executives and directors of Silicon Valley Bank, seeking to recover billions of dollars for alleged gross negligence and breaches of fiduciary duty that caused the bank's March 2023 collapse, one of the largest U.S. banking failures.

In a complaint filed in San Francisco federal court, the FDIC, in its capacity the bank's receiver, said the defendants ignored fundamental standards of prudent banking and the bank's own risk policies in letting the bank take on excessive risks to boost short-term profit and its stock price.

The FDIC faulted the bank's overreliance on unhedged, interest rate-sensitive long-term government bonds such as U.S. Treasuries and mortgage-backed securities, as rates looked set to - and eventually did - rise.

It also objected to the payment of a "grossly imprudent" $294 million dividend to its parent that drained needed capital "at a time of financial distress and management weakness" in Dec. 2022, less than three months before its demise.

"SVB represents a case of egregious mismanagement of interest-rate and liquidity risks by the bank's former officers and directors," the complaint said.

The defendants include former Chief Executive Gregory Becker, former Chief Financial Officer Daniel Beck, four other former executives, and 11 former directors.

Becker's lawyer was traveling on Thursday and unable to comment, a spokesperson said.

Lawyers for former Chief Risk Officer Laura Izurieta called it "outrageous" to make her a defendant, saying she provided sound risk management advice before stepping down in April 2022, well before the bank's collapse.

"Their actions are reflective of outgoing FDIC leadership that is not interested in the truth," Izurieta's lawyers said.

Lawyers for the other defendants did not immediately respond to requests for comment.

Silicon Valley Bank's March 10, 2023 collapse and seizure by the FDIC shocked financial markets.

It disrupted many technology startups whose deposits it held, and upset many customers because an unusually large percentage of its deposits was uninsured.

The collapse presaged the demise of two other banks, Signature Bank ( SBNY ) and First Republic Bank ( FRCB ), and prompted fears of a replay of the 2008 banking crisis.

First Citizens BancShares, a North Carolina lender, acquired Silicon Valley Bank's deposits and tens of billions of dollars of loans in an FDIC-arranged sale.

Silicon Valley Bank had about $209 billion of assets when it failed. Larger U.S. bank failures include Lehman Brothers in 2008, Washington Mutual including its banking unit in 2008, and First Republic in 2023.

The case is FDIC as receiver v Becker et al, U.S. District Court, Northern District of California, No. 25-00569.