The U.S. Department of Justice and the Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank (SVB), according to a report.
The investigations are examining SVB executives' sale of stock prior to the bank's closure and whether the firm accurately disclosed financial risks, according to sources who spoke with the Wall Street Journal. The probes are reportedly in a preliminary phase and may not lead to allegations of wrongdoing.
The bank, a 40-year-old institution that was a go-to financial partner for tech startups and their investors, was abruptly shut down by regulators on Friday after a bank run left it with a negative cash balance of close to $1 billion.
Two days earlier, the bank disclosed that it had sold off its securities portfolio at a loss and was attempting to raise about $2 billion in capital with the help of a private equity firm.
The announcement spooked investors and led to a massive selloff in shares; some investors advised startups in their portfolios to pull their funds from the bank.
Filings show that SVB's former CEO, Greg Becker, sold $3.6 million in shares days before it disclosed the loss in capital raise. SVB's CFO, Daniel Beck, also sold shares worth about $575,000 on the same day. Both were preplanned stock sales.
Annie Gaus can be reached at [email protected]