A PYMNTS Company

DOJ & SEC Investigating Silicon Valley Bank

 |  March 14, 2023

Prosecutors and regulators are reportedly investigating Silicon Valley Bank and two of its executives.

The United States Department of Justice (DOJ) and the Securities and Exchange Commission (SEC) are each running their own investigations into the collapse of the bank and the stock sales made by two officers of the bank’s parent company, SVB Financial Group, The Wall Street Journal (WSJ) reported Tuesday (March 14), citing unnamed sources.

The DOJ, the SEC and SVB Financial Group did not immediately reply to PYMNTS’ request for comment.

Investigations of events like the bank’s collapse are common, and this one is in its early stages and may not result in charges, according to the report.

Read more: Shareholders Sue Silicon Valley Bank Parent, CEO & CFO

On Sunday, March 12, SEC Chair Gary Gensler released a statement in which he said: “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. Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws.”

According to the WSJ report, the agencies’ investigations include looking into the sales of shares by SVB Financial Group CEO Greg Becker and Chief Financial Officer Daniel Beck during the week before the bank failed.

On Feb. 27, Becker sold $2.3 million worth of shares and Beck sold $575,000 worth, according to the report, which cited securities filings.

The report said that when companies experience negative events, the SEC often looks into whether the firms disclosed financial risks or business uncertainties in their regulated, periodic disclosures or statements to investors and analysts.

This report comes a day after a class action lawsuit was filed on behalf of a select group of investors in SVB Financial Group alleging that the firm did not disclose risk to investors.

The complaint alleges that because of failure to disclose risk, the plaintiffs were damaged when SVB Financial Group sold its securities at “artificially inflated prices” and later released an “alleged corrective disclosure.”