Federal authorities have formally started looking into Silicon Valley Bank’s demise as well as the profitable stock sales made by bank executives just before things went bad. The Justice Department and SEC investigations were initially reported by the Wall Street Journal, which also noted that such inquiries are typical in such circumstances.
There’s a chance that no accusations or even claims of misconduct will be made. But, according to the Journal and the New York Times, authorities will be examining executive sales of company stock prior to the bank’s failure, including those made by the CEO Gregory Becker and the CFO Daniel Beck.
On February 27, both sold shares; according to the Journal, Beck sold shares valued at around $575,000 while Becker made $2.3 million. Both stories highlight that both did it legally by planning the transactions 30 days in advance in accordance with a regulation intended to prevent profiting from insider information. The Journal reports that on the day of the stock sales, a new rule went into effect that calls for a 90-day window rather than a 30 day one. Luc Olinga offers his opinion on Becker’s selling specifically at The Street.
There is no issue a priori from a legal standpoint, he writes. Yet, it does not seem good from an optical standpoint, and Greg Becker will struggle to gain backing. Olinga seems to be accurate in his assessment of that.
According to The Washington Post, Democratic Rep. Ro Khanna, who represents the district where SVB is based, has already demanded that Becker refund the funds. “There should be a clawback of any of that money,” Khanna told the publication. Money ought to be distributed to the depositors.
