The United States Securities and Exchange Commission (SEC) and the Department of Justice (DOJ) are reportedly investigating Silicon Valley Bank (SVB), which was taken over by regulators last week after experiencing an unprecedented run on its deposits.
The California-based financial institution mainly serves venture capitalists and cryptocurrency startups.
The investigations are still in their early stages, and no indictments or accusations of wrongdoing have been made yet. However, authorities are also looking into the stock sales made by SVB Financial executives days before the bank’s collapse. The Justice Department’s fraud prosecutors in Washington and San Francisco are involved in the investigation.
Last week, SVB Financial Group’s shares, which formerly controlled the bank, fell by 60%, leading to a halt in trading since Friday. SVB’s deposits invested heavily in government-sponsored debt securities, which suffered due to the Federal Reserve’s decision to raise interest rates in the previous year. Customers tried to withdraw $42 billion, equivalent to nearly a quarter of the bank’s total deposits, last Thursday alone, causing the bank to fail. SVB which held assets valued at $209 billion and deposits of nearly $175.4 billion.
This makes it the largest financial institution to fail in the United States since the 2008 financial crisis. In addition to being sued by shareholders for securities fraud, the bank is currently facing multiple investigations by the Securities and Exchange Commission (SEC) and the Department of Justice (DOJ).