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DOJ, SEC probing Silicon Valley Bank collapse

The Justice Department and the Securities and Exchange Commission have launched investigations into the collapse of Silicon Valley Bank, two people familiar with the matter told The Associated Press on Wednesday.

DOJ, SEC probing Silicon Valley Bank collapse

Newslooks- (AP)

The Justice Department and the Securities and Exchange Commission have launched investigations into the collapse of Silicon Valley Bank, two people familiar with the matter told The Associated Press on Wednesday.

The investigations – which are separate inquiries – are in the early stages and will also examine the actions of the bank’s senior executives, the people said.

The Justice Department’s investigation involves federal prosecutors in California, along with prosecutors involved in fraud cases, the people said.

A person reads a notice posted on the front doors of a Silicon Valley Bank branch that reads “FDIC Acts to Protect All Depositors of the former Silicon Valley Bank, “Santa Clara, California,” in Pasadena, Calif., on Monday, March 13, 2023. The U.S. government announced a plan late Sunday meant to shore up the banking industry following the collapses of Silicon Valley Bank and Signature Bank since Friday. (AP Photo/Damian Dovarganes)

They were not authorized to publicly discuss the specific details of the ongoing investigations and spoke to the AP on condition of anonymity.

The collapse of Silicon Valley Bank on Friday — the largest bank failure since the financial crisis of 2008 — and Signature Bank two days later have rattled markets as investors seek the safety of bonds amid renewed concerns about problems in the banking sector. On Wednesday, Credit Suisse, which has been beset by problems long before Silicon Valley Bank’s demise, saw its shares hit their lowest level ever as the bank’s largest shareholder declined to offer further support.

A branch of Signature Bank is photographed, late Sunday, March 12, 2023, in New York. Regulators announced that the New York-based bank had failed and was being seized. At more than $110 billion in assets, Signature Bank is the third-largest bank failure in U.S. history. Signature’s failure comes just days after the failure of Silicon Valley Bank. (AP Photo/Bobby Caina Calvan)

The Federal Reserve is facing criticism for missing what observers say were clear signs that Silicon Valley Bank was at a high risk of default.

And a class action lawsuit was filed against the parent company of Silicon Valley Bank, its CEO and its chief financial officer, saying that the bank didn’t disclose the risks that future interest rate increases would have on its business.

As part of its investigation, the SEC has begun the process of seeking documents by sending out hold notices, said one of the people familiar with the matter. A hold notice requires the recipient to preserve relevant documents and electronically stored information.

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