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SVB collapse reportedly being probed by Justice Department, SEC

By
Thomas Barrabi
Published March 14, 2023
Updated March 14, 2023, 2:29 p.m. ET

The Justice Department and the Securities and Exchange Commission are investigating the inner workings of Silicon Valley Bank after its rapid demise prompted fears of bank chaos this week.

The separate probes will include an examination of stock sales by top executives at the bank’s parent company, SVB Financial, including CEO Greg Becker and CFO Daniel Beck, prior to the firm’s downfall.

The probes are still in their early stages and may not result in any formal charges or claims of wrongdoing, the Wall Street Journal reported on Tuesday, citing sources familiar with the matter.

SVB and its top brass have faced unprecedented scrutiny since regulators shut down the bank last week. The feds guaranteed all deposits at SVB and another shuttered firm, Signature Bank of New York, after a flurry of withdrawals prompted fears of a nationwide run on banks.

Silicon Valley Bank customers outside the bank.
The Journal report comes a day after SVB Financial Group and two top executives were sued by shareholders. CHINE NOUVELLE/SIPA/Shutterstock

Becker made roughly $2.3 million in cash after exercising options on 12,451 shares of SVB stock on Feb. 27 and selling them the following day, recent regulatory filings showed. Beck raked in more than $575,000 in proceeds after selling about 2,000 shares on Feb. 27.

The Post has reached out to the SEC and the DOJ for comment.

Federal probes are commonplace after major financial upheaval involving public companies or institutions.

The executives’ stock transactions occurred just days before an increasingly cash-strapped SVB disclosed a $1.8 billion loss on a $21 billion fire sale of its bond holdings.

Follow The Post’s coverage of Silicon Valley Bank’s collapse

The admission prompted a wave of attempted withdrawals – valued at $42 billion on last Thursday alone – and eventually led to SVB’s closure.

SVB’s collapse ranked as the second-largest bank failure in US history and the largest of its kind since the Great Recession in 2008. The bank had approximately $209 billion in assets as of the end of last year.

Earlier this week, SVB shareholders filed suit against the bank, Becker and Beck, alleging the executives of concealing the fact that rising interest rates left the firm “particularly susceptible” to a bank run.

The Federal Reserve, Treasury Department and FDIC have guaranteed all deposits held at SVB, whether they were insured or not. In normal circumstances, the FDIC insures up to $250,000 per account.

The bailout’s broad approach drew criticism from billionaire hedge fund titan Ken Griffin, who argued the Biden administration’s decision to backstop all depositors was a sign that “capitalism is breaking down before our eyes.

“There’s been a loss of financial discipline with the government bailing out depositors in full,” Griffin told the Financial Times.

Griffin added that regulators who missed warning signs at SVB prior to its collapse were the “definition of being asleep at the wheel.”