The investigations are separate from one another but will look into Silicon Valley Bank’s collapse and stocks sold by executives before its fall.
News
The United States Department of Justice (DoJ) and the Securities and Exchange Commission (SEC) have reportedly launched inquiries into the sudden collapse of Silicon Valley Bank (SVB), which was shuttered by regulators last week amid a historic bank run.
According to “people familiar with the matter” — as cited in a March 14 report by The Wall Street Journal — the probes will look into events that led to the bank’s collapse, along with the stock sales that SVB financial officers undertook in the weeks leading up to the closure.
Securities filing show the bank’s CEO, Greg Becker, and chief financial officer, Daniel Beck, sold shares two weeks before the bank’s failure, sparking outrage from some observers.
Becker sold $3.6 million worth of shares on Feb. 27, while Beck sold $575,180 in stocks that same day, according to Newsweek. In total, SVB executives and directors cashed out $84 million worth of stock over the past two years, CNBC reported.
[embedded content]
However, the probes are in the early stages and may not lead to charges or allegations of wrongdoing, the sources said.
Another person with direct knowledge of the situation, quoted by NPR, said a formal announcement from the DoJ is expected in the coming days.
Cointelegraph contacted the SEC and the DoJ but did not receive an immediate response.
We must get a full accounting of what happened and why so those responsible can be held accountable.
In my Administration, no one is above the law.
— President Biden (@POTUS) March 13, 2023
Only two days after the collapse of Silicon Valley Bank, SEC Chairman Gary Gensler made a stark warning that the regulator would be on the lookout for violators of U.S. securities laws.
“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” said Gensler.
Related: Silicon Valley Bank was the tip of a banking iceberg
The U.S. Federal Reserve is also looking into the bank’s collapse in its own way — namely, how it supervised and regulated the now-collapsed financial institution.
Meanwhile, on March 13, SVB Financial Group — SVB’s parent organization — and two executives were reportedly sued by shareholders accusing them of failing to disclose how rising interest rates would leave the bank “particularly susceptible” to a bank run.
The lawsuit seeks damages for SVB investors from June 16, 2021, to March 10, 2023.
