US DOJ and SEC launch inquiries into Silicon Valley Bank collapse
Jessie A Ellis Mar 16, 2023 09:44
The DoJ and SEC have started investigations into the sudden collapse of Silicon Valley Bank and the stock sales made by its financial officers leading up to its closure. The probes are in their early stages and may not result in charges or allegations of wrongdoing.
The sudden collapse of Silicon Valley Bank (SVB) has attracted the attention of the US Department of Justice (DoJ) and Securities and Exchange Commission (SEC), who have launched investigations into events leading up to the bank's closure. According to sources, the probes will scrutinize the stock sales made by SVB financial officers in the weeks before the bank's collapse, as well as the events that led to its failure.
Reports suggest that SVB's CEO, Greg Becker, and chief financial officer, Daniel Beck, sold shares just two weeks before the bank's collapse, outraging some observers. Becker reportedly sold $3.6 million worth of shares on February 27, while Beck sold $575,180 in stocks on the same day. In total, SVB executives and directors cashed out $84 million worth of stock over the past two years.
The investigations are in their early stages and may not lead to charges or allegations of wrongdoing, according to sources. However, a formal announcement from the DoJ is expected in the coming days, says another person with direct knowledge of the situation.
In addition to the investigations by the DoJ and SEC, the US Federal Reserve is also looking into how it supervised and regulated SVB before its collapse.
SVB Financial Group, SVB's parent organization, and two executives were sued by shareholders on March 13. The lawsuit accuses 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.
The collapse of SVB has sent shockwaves through the financial industry, prompting warnings from the SEC about potential violations of US securities laws. The investigations by the DoJ and SEC are expected to shed more light on the events that led to the bank's collapse and the stock sales made by its financial officers.
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