SVB Exec’s Stock-Sales Probed By DOJ, SEC

The Justice Department and the Securities and Exchange Commission are (separately) investigating the collapse of Silicon Valley Bank, focused on the possibility of misconduct by officers, including whether stock sales by executives violated trading rules, according to a person familiar with the matter.

SVB Financial Chief Executive was optimistic days before his bank collapsed, saying at a conference last week that it was ‘a great time to start a company.’

As we detailed previously, as lines (real and virtual) full of anxious depositors grew last week outside of Silicon Valley Bank branches around the world, and reassurances of “liquidity” were gushed from the C-Suite, three individuals within the firm were perhaps less troubled than those seeking their hard-earned cash back from the soon-to-be-failed bank.

On Feb 27th, Gregory Becker, the CEO of Silicon Valley Bank, sold $3.6 million worth (11%) of his shares…

Daniel Beck, the CFO, sold 32% (around $600,000) of his holdings…

And finally, CMO Michelle Draper sold 28% of her holdings over the last month…

Notice that none of them had sold anything sizable for a year or so before this most recent (pre-collapse) sale.

Additionally, Silicon Valley Bank on Friday paid out annual bonuses to eligible U.S. employees, just hours before the bank was seized by the U.S. government, Axios has learned from multiple sources.

Of particular note, as The Wall Street Journal reports, the executives’ sales were done under so-called 10b5-1 plans filed 30 days earlier.

These plans allow insiders to schedule share sales in advance to allay suspicion of trading on nonpublic information. The SEC recently tightened rules for the plans, which include a 90-day waiting period before sales can be executed. The new rules went into effect on Feb. 27, the same day the executives sold.

On Sunday evening, SEC Chair Gary Gensler said the agency is “particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct” that might harm investors or markets, without naming any specific companies.

WSJ concludes by highlighting the fact that no one at the bank has been accused of wrongdoing and the investigation could end without charges being brought.