The Justice Department and Securities and Exchange Commission are investigating the collapse of Silicon Valley Bank.
Silicon Valley Bank was in FDIC receivership on Friday after investors withdrew more than $40 billion in a run on the bank.
The so-called bank regulators somehow ‘failed’ to notice Silicon Valley Bank was a ticking time bomb when more than two-thirds of its deposits were invested in mortgage-backed securities that yielded 1.5% as the Fed raised rates 450 basis points last year, according to its balance sheets.
The DOJ and SEC are now conducting separate investigations into SVB’s failure.
ABC News reported:
The Justice Department and Securities and Exchange Commission are probing the collapse of Silicon Valley Bank, according to two people familiar with the situation.
The probes, which are separate, are in the preliminary stages and it is not clear whether any wrongdoing has been committed. It is not uncommon after a large public collapse of a bank or company for the Justice Department or SEC to step in and investigate.
The Justice Department and SEC both declined to comment. The news of the probes was first reported by The Wall Street Journal.
In a statement Sunday, SEC Chair Gary Gensler said the agency was focused on “monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors, capital formation, or the markets more broadly.”
“Without speaking to any individual entity or person, we will investigate and bring enforcement actions if we find violations of the federal securities laws,” he said.
The Federal Reserve on Monday announced Vice Chair for Supervision Michael S. Barr will lead a review of its regulatory failure of Silicon Valley Bank.
“The events surrounding Silicon Valley Bank demand a thorough, transparent, and swift review by the Federal Reserve,” Fed Chairman Jerome Powell said in a statement.
“The Federal Reserve Board on Monday announced that Vice Chair for Supervision Michael S. Barr is leading a review of the supervision and regulation of Silicon Valley Bank, in light of its failure. The review will be publicly released by May 1.” the Board of Governors of the Federal Reserve announced Monday.
Silicon Valley Bank was hit with its first securities lawsuit on Monday.
Shareholders filed a class action lawsuit against SVB on Monday arguing they were never warned about the risks to its business model, Bloomberg reported.