According to rumors, the SEC & DOJ are also looking into insider stock sales that took place just days before the Silicon Valley bank failed.
The failure of Silicon Valley Bank is reportedly the subject of an inquiry by the Justice Department and the US Securities and Exchange Commission.
SVB Under Fire From SEC, DOJ
As the independent investigations are still in their early stages, it’s likely that no indictments or accusations of wrongdoing will come from them. Prosecutors and authorities routinely launch investigations after big, unplanned losses are incurred by financial institutions or public organizations.
Shares of the bank’s former controlling company, SVB Financial Group, fell by 60% last week, and trading in those shares has been suspended since Friday.
According to evidence gathered, the investigations are also looking into the stock sales that SVB Financial executives made in the days preceding the demise of the bank.
The Justice Department’s fraud prosecutors in San Francisco and Washington are both involved in the investigation being carried out by the department.
SVB Crisis Is Growing
A week ago, a spike in consumer deposit withdrawals led to the bank’s failure. Customers sought withdrawals totaling $42 billion, or about a fourth of the bank’s total deposits, just on Thursday.
The bank’s bottom line suffered greatly as a result of the torrent of withdrawals. The Federal Reserve’s decision to raise interest rates throughout the course of the preceding year caused the market value of the United States Treasuries and other government-sponsored debt instruments, in which it had previously invested substantial amounts of deposits, to decline.
The bank apparently held deposits totaling around $175 billion and assets worth $209 billion before it abruptly collapsed. The Silicon Valley Bank’s demise made it the biggest financial institution in the country to fail since the 2008 financial crisis. Because of alleged securities fraud, the now-defunct bank is currently being sued by its stockholders.
