According to reports, the Justice Department and the Securities and Exchange Commission of the United States are conducting an investigation into the failure of Silicon Valley Bank. The investigation comes after the California-based financial institution — majorly catering to venture capitalists and startups — was taken over by regulators last week in the midst of an unprecedented run on its deposits.
SVB Under Fire From SEC, DOJ
The independent investigations are still in the early stages at this point, and it is possible that they will not result in any indictments or accusations of malfeasance. Investigations are frequently initiated by prosecutors and authorities after large, unforeseen losses are sustained by financial institutions or public enterprises. Last week, shares of SVB Financial Group, which formerly controlled the bank, dropped by 60%, and trade in those shares has been halted since Friday.
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According to information obtained, the probes are also looking into the stock sales that executives at SVB Financial made in the days leading up to the bank’s failure. The investigation being conducted by the Justice Department includes the participation of the department’s fraud prosecutors in both Washington and San Francisco.
The Widening SVB Crisis
A rush of customers to deposit their money caused the bank to fail a week ago. On Thursday alone, customers attempted withdrawals totaling $42 billion, which is equivalent to almost a fourth of the bank’s total deposits. The deluge of withdrawals was catastrophic for the bank’s bottom line. It had previously invested significant sums of deposits in United States Treasuries and other government-sponsored debt securities, the market value of which had decreased as a result of the Federal Reserve’s decision to raise interest rates during the course of the previous year.
Prior to its sudden collapse, the bank reportedly housed assets worth $209 billion and deposits of nearly $175.4 billion. With this collapse, the Silicon Valley Bank became the largest financial institution to fail in the United States since the 2008 financial crisis. Thank bank is presently being sued by its shareholders as well on allegations of securities fraud.
Also Read: Trouble Grows For Silicon Valley Bank As Shareholders File Lawsuit For Fraud
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Source: https://coingape.com/silicon-valley-bank-now-under-investigation-by-u-s-sec-department-of-justice/