SVB's failure is being investigated by US authorities, report says
Justin Sullivan/Getty Images
- Silicon Valley Bank's failure is being investigated by US authorities, the WSJ reported.
- The DOJ fraud squad and the SEC are looking into stock sales by SVB officers before the bank collapsed.
- The California bank was taken over by regulators last week after a run on deposits.
Silicon Valley Bank is now being investigated by US authorities after the California bank was seized by regulators last week amid a flood of deposit withdrawals that crushed its finances, The Wall Street Journal has reported.
The Department of Justice and the Securities and Exchange Commission are separately examining SVB's failure, the WSJ reported Tuesday, citing people familiar with the matter.
The probes are in their early stages and won't necessarily lead to wrongdoing allegations, as it's typical for US regulators to open investigations when financial firms or public companies fail abruptly.
US investigators are looking into stock sales made by executives at SVB Financial — the group that owns the lender — only days before the bank collapsed, the report said. The DOJ's probe involves the agency's fraud prosecutors.
Massachusetts regulators are also looking into the stock sales, seeking to discover what SVB officials knew or said about the lender's financials and business three months before it failed.
From April to December last year, SVB didn't have a chief risk officer at work, Bloomberg reported Tuesday. That lack is being examined by the Federal Reserve, it said.
Investors in SVB have alleged the bank failed to make appropriate disclosures in a class-action lawsuit filed Monday, per Fox Business News. They claim SVB didn't lay out the risks to the business from rising interest rates and say it should have warned shareholders that the bank was susceptible to a bank run.
When SVB was seized over the weekend, SEC Chair Gary Gensler said the markets regulator was scrutinizing the bank any signs of wrongdoing. US regional banks suffered a market rout as the financial difficulties emerged at SVB and Signature Bank, also shut down.
"In times of increased volatility and uncertainty, we at the SEC are particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly," Gensler said in a statement Sunday.
The DOJ and SVB didn't immediately respond to Insider's request for comment on the probe.
The Federal Deposit Insurance Corp, which took control of the SVB when it collapsed, declined to comment.