U.S. Is Said to Open Investigation Into Silicon Valley Bank Collapse

[BumRushDaShow]

Last edited Tue Mar 14, 2023, 02:34 PM - Edit history (2)

Source: New York Times

The Justice Department has opened an investigation into the collapse of Silicon Valley Bank, the California lender that was taken over by federal regulators on Friday after its depositors rushed to pull their money out of the bank, two people with knowledge of the matter said. The investigation is in its early stages and it is unclear just what federal prosecutors are focused on, the person said. A Justice Department spokesman declined to comment.

One potential focus could be sales of company shares by several bank executives in the weeks before the bank’s failure, several legal experts said. The sales generated millions of dollars in proceeds, though some of the bank’s executives sold stock pursuant to insider selling plans that set the timing of such sales in advance. Such plans are set up by corporate executives to avoid the appearance of trading on confidential information.

For example, under a prearranged plan, Silicon Valley Bank’s former chief executive, Gregory Becker, exercised options in late February that permitted him to sell shares worth about $3 million for around $287 a share; the sales were disclosed in a regulatory filing on March 1. The filing also shows the stock trading plan was set up on Jan. 26 when shares of the bank closed at $296.

Some politicians have said the bank executives should return any money they made from those stock sales. Mr. Becker could not be immediately reached for comment. The investigation was first reported by The Wall Street Journal. It is not uncommon for investigators to look into prearranged stock selling plans when the sales take place shortly before bad news that tanks a company’s stock.

Read more: https://www.nytimes.com/2023/03/14/business/silicon-valley-bank-investigation.html

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Article updated.

Original article -

The Justice Department has opened an investigation into the collapse of Silicon Valley Bank, the California lender that was taken over by federal regulators on Friday after its depositors rushed to pull their money out of the bank, two people with knowledge of the matter said. The investigation is in its early stages and it is unclear just what federal prosecutors are focused on, the person said. A Justice Department spokesman declined to comment.

One potential focus could be sales of company shares by several bank executives in the weeks before the bank's failure, several legal experts said. The sales generated millions of dollars in proceeds, though some of the bank's executives sold stock pursuant to insider selling plans that set the timing of such sales in advance. Such plans are setup by corporate executives to avoid the appearance of trading on confidential information.

For example, under a prearranged plan, Silicon Valley Bank's former chief executive, Gregory Becker, exercised options in early March that permitted him to sell shares worth about $3 million. Some politicians have said the bank executives should return any money they made from those stock sales.

Mr. Becker could not be immediately reached for comment. Lawyers from Sullivan & Cromwell, which has been doing legal work for the bank, did not return requests for comment. The investigation was first reported by The Wall Street Journal. It is not uncommon for investigators to look into prearranged stock selling plans when the sales take place shortly before bad news that tanks a company's stock.

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[Thomas Hurt]

1. Yeah, you would hope so.

[peppertree]

2. For starters, who sold them all those bonds

Sounds like someone was trying to unload them - and colluded with SVB management to use the bank as a dumpster for securities that insiders knew would soon lose value.

That - and, of course, Peter Thiel the Nazi.

[SheltieLover]

3. They should confiscate every penny from those responsible.

Every. Fucking. Penny.

[sarcasmo]

4. Peter Thiel, come on down.

[Warpy]

5. This is standard procedure for any bank collapse triggering FDIC payouts

This one will be especially fun due to the C-level execs selling their stock and apparently warning Peter Thiel to get out just before it happened. I don't suppose anything will happen to Thiel, he's rich enough to be revered as a demigod. The bank execs, on the other hand, might go to jail for a few months.

I hope the parent company is also under a microscope. They were the ones putting pressure on the bank to make high risk, high return loans because the crypto crash had left them short of cash.

The whole thing is a godawful mess caused by Silicon Valley believing its own bullshit. More of this will likely follow.