by Less than two weeks before Silicon Valley Bank became the largest bank failure since the 2008 financial crisis, top executives of the company sold stock totaling several million dollars, according to federal disclosures obtained by ABC News.
Former SVB president and CEO Greg Becker sold more than $3.5 million in shares of 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 member of the SVB 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 Justice Department and the Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank, according to two people familiar with the situation.
The investigations, which are separate from each other, are in the preparatory phase and it is not clear whether there has been any wrongdoing. It is not uncommon for the Justice Department or the SEC to step in and investigate after a major public collapse of a bank or company.
Greg Becker, President and CEO of Silicon Valley Bank (SVB), speaks at the Milken Institute Global Conference in Beverly Hills, California, May 3, 2022.
Patrick T. Fallon/AFP via Getty Images, FILE
Sources tell ABC News that part of the FBI’s early focus will be to investigate whether any of Silicon Valley’s senior executives received unusual bonuses or sold stock in the days leading up to the bank’s collapse. In short: is there any evidence of insider trading?
The U.S. Department of Justice and the SEC both declined requests for comment from ABC News.
In the days following Becker’s multimillion-dollar sale of his SVB stock and before the bank’s collapse, the then-CEO seemed confident during remarks to an audience of investors, 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 the comments reported by Becker, SVB announced a $1.8 billion loss on sales of securities, including government bonds and mortgage bonds, that had lost significant value over the past year due to an aggressive series of rate hikes at the Federal Reserve . The bank made plans to raise more than $2 billion in an effort to strengthen its balance sheet.
According to the New York Times, the rating agency had called Moody’s the week before Becker’s confident projection at the tech conference — and subsequently the bank’s eventual collapse — to tell Becker that “bank bonds were in danger of being downgraded to junk.” That would mean the call came around the same time Becker sold the 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 ABC News’ multiple requests for comment. Silicon Valley Bank spokesmen sent questions from ABC News to the Federal Deposit Insurance Corporation.
In the bank’s SEC year-end 2022 annual report, filed Feb. 24, under “Credit Risks,” the company wrote, “Due to the credit profile of our loan portfolio, our levels of non-performing assets and write-offs may become volatile. We have and will in the future may have to make material provisions for credit losses in any period, which could reduce net income, increase net losses, or otherwise adversely affect our financial condition during that period. different credit profile than that of most other banking companies. Our clients’ credit profiles vary within our loan portfolio, based on the nature of our lending to different market segments.
Another risk factor, the company disclosed, was that their “interest margin could further decline in the future. Any material reduction in our interest margin could have a material adverse effect on our business, results of operations or financial condition.”
Under the subsection for “Legal, compliance and regulatory risks,” SVB said the same rules now considered not strong enough were so cumbersome that they could jeopardize business at the company.
“We are subject to extensive regulations that may limit or limit our activities, impose financial requirements or restrictions on the conduct of our business, or result in increased costs for us, and the severity of the regulatory framework that applies to us, can 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 enhanced prudential standards that apply to large bank holding companies. If we exceed certain other thresholds, we will be subject to even more strict rules,” he added.
