Silicon Valley Bank CEO sold shares before bankruptcy – 03/10/2023 – Market

Silicon Valley Bank (SVB) CEO Greg Becker sold the equivalent of $3.6 million worth of the bank’s stock in the week before it went bankrupt, according to The Wall Street Journal.

Regulatory authorities in the United States closed the institution on Friday (10), in the biggest bank failure in the United States since the financial crisis of 2008.

According to company documents obtained by the newspaper, the sale took place on February 27, when a fund owned by Becker also acquired options worth US$ 1.3 million.

Negotiations for that date were agreed on January 26, based on an SEC rule (the American securities commission) that allows scheduling of sales in advance to avoid suspicions of “insider trading” (use of privileged information in financial operations ).

The move was made before the bank disclosed on Wednesday (8) that it had registered a net loss of US$ 1.8 billion with the sale of part of its investment portfolio.

SVB also said on that date that it intended to raise $2.25 billion in new funding to cover losses.

Contacted by the Wall Street Journal, Greg Becker did not respond to requests for comment by the time the article was published.

Under the impact of the SVB bankruptcy, the world’s main stock exchanges closed the day down. In the United States, Dow Jones fell 1.07%, S&P 500, 1.45%, and Nasdaq, 1.76%. The Argentine Stock Exchange fell by 4.50%. In Europe, the indexes of Germany, England and France also retreated.

The fall of the Ibovespa was also accentuated by the US bank crisis. The index registered 103,618 points at the close, down 1.38%.

SVB’s problems stem from a decision made at the height of the tech boom to sink $91 billion of its deposits into long-term securities, such as mortgage and US Treasury bonds, that were considered safe but are now worth $15 billion. less than when the bank bought them after the Federal Reserve (the US central bank) aggressively raised interest rates.

The impact of the bank’s problems could be felt widely. The institution is the banking partner of half of the US venture capital-backed technology and life sciences companies, and is a major player in providing credit lines to the $10 trillion private equity sector.

However, SVB is small compared to the largest US banks. The financial institution controlled US$ 209 billion in assets, against more than US$ 3 trillion for JPMorgan Chase, the largest company in the sector, for example. The biggest concern from the point of view of the financial system is the possibility that customers of other banks rush to withdraw their deposits, which would generate a ripple effect in the financial system.