Less than two weeks before Silicon Valley Bank becomes the biggest bank failure Since the 2008 financial crisis, the company’s top executives have sold shares totaling millions of dollars, according to federal information obtained by ABC News.
Former CEO of SVB Greg Becker sold more than $3.5 million worth of stock in his company on Feb. 27, according to a disclosure to the U.S. Securities and Exchange Commission filed March 1.
Becker was not the only senior SVB executive to sell common stock in the company. In a separate FEC disclosure, also filed March 1, SVB chief financial officer Daniel Beck sold $575,180 of the company’s common stock on February 27.
ABC News reported this week that the Department of Justice and the Securities and Exchange Commission are fathom the collapse of Silicon Valley Bank, according to two people familiar with the situation.
The investigations, which are separate, are in the preliminary stages and it is unclear whether any wrongdoing has been committed. It is not uncommon that after a major public collapse of a bank or business, the Department of Justice or the SEC will step in and investigate.
Sources tell ABC News that part of the FBI’s early efforts will be to determine if any of Silicon Valley’s top executives got unusual bonuses or sold stock in the days leading up to the bank’s collapse. . In short, is there evidence of insider trading.
Both the US Department of Justice and the SEC declined ABC News’ requests for comment.
In the days after Becker sold millions of dollars worth of his SVB shares and before the bank’s collapse, the then-CEO sounded confident during his remarks to an audience of investors, d Wall Street analysts and technology executives attending a technology conference at the Palace Hotel in San Francisco, according to a copy of his remarks obtained by ABC News.
A day after Becker’s reported remarks, SVB announced a loss of $1.8 billion on the sale of securities, including treasury bills and mortgage bonds that had lost significant value over the previous year. due to an aggressive series of interest rate hikes at the Federal Reserve. The bank has announced plans to raise more than $2 billion in a bid to shore up its balance sheet.
According to New York Times, the week before Becker’s confident showing at the tech conference — and then the bank’s ultimate meltdown — ratings agency Moody’s had called to tell Becker that “bank bonds were at risk of being downgraded to junk.” . That would mean the call came around the same time Becker sold more than $3.5 million of his SVB common stock on Feb. 27.
Asked by ABC News to confirm the call, a Moody’s spokesperson declined to comment.
Becker did not respond to multiple requests for comment from ABC News. Silicon Valley Bank spokespersons directed ABC News’ questions to the Federal Deposit Insurance Corporation.
In the bank SEC Annual Report for the end of 2022, filed Feb. 24, under “Credit Risk,” the company wrote, “Due to the credit profile of our loan portfolio, our levels of non-performing assets and write-offs may be volatile. We have and may in the future, we will be required to make significant provisions for credit losses in any period which could reduce net income, increase net losses or otherwise adversely affect our financial condition in that period. period Our loan portfolio has a different credit profile than most other banking companies Our customers’ credit profiles vary across our loan portfolio, depending on the nature of our loans to different market segments.
Another risk factor, the company disclosed, was that their “interest rate spread could narrow further in the future. Any material narrowing of our interest rate spread could have a material adverse effect on our business, our results of operations or financial condition”.
In the sub-section “Legal, compliance and regulatory risks”, SVB stated that the same regulations now deemed insufficiently strict were so burdensome that they could jeopardize the company’s business.
“We are subject to extensive regulation that could limit or restrict our business, impose financial requirements or limitations on the conduct of our business, or result in higher costs for us, and the stringency of the regulatory framework applicable to us may increase if and because our balance sheet continues to grow,” SVB wrote in its annual filing.
“As a bank holding company with more than $100 billion in average total consolidated assets, we are subject to strict regulations, including certain heightened prudential standards applicable to large bank holding companies. If we exceed certain other thresholds , we will become subject to even more stringent regulations,” he added.