Federal authorities have launched an investigation into the failure of Silicon Valley Bank, multiple media outlets reported on Tuesday.
The Wall Street Journal first report The Justice Department and Securities and Exchange Commission are investigating the collapse of the largest US bank since the Great Recession of 2008.
The Federal Deposit Insurance Corporation (FDIC), an independent federal agency that insures deposits, said on Sunday that Silicon Valley banks were closed after the California Office of Financial Protection and Innovation closed after a bank run due to liquidity problems. was acquired.
The collapse occurred when the bank did not have enough cash on hand for customers to withdraw, causing panic and a runaway among customers and investors. The Journal reported that customers attempted to withdraw $42 million on Thursday, about a quarter of the bank’s total deposits.
Those who ran to the banks to withdraw money included mostly those with more than $250,000 per FDIC-insured account during the crash.
The WSJ reports that the investigation is in its early stages and may not result in charges, but authorities are investigating a stock sale made by the bank’s treasurer just days before the bank’s collapse.
The New York Times independently Confirmed DOJ and SEC investigations.
The SEC instructed The Hill to: statement Officials said on Sunday that they are focused on market stability and are prosecuting all forms of fraud that could threaten investors, capital formation or the market.
“If it finds violations of federal securities laws, it will investigate and take enforcement action without speaking to individual entities or individuals,” the SEC said.
The Hill has reached out to DOJ for comment. Hill also reached out to Sullivan & Cromwell Law Firm, which reportedly provides legal advice to the bank, for comment.
The Times reports that investigators often investigate planned sales that were scheduled just before a company’s stock price fell.
As part of its plan to calm markets, the Biden administration has promised that starting Monday, everyone with deposits in banks will have access to their money and taxpayers will not pay for the losses.
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