50% Off! Beat the market in 2025 with InvestingProCLAIM SALE

Fed, SEC probing Goldman Sachs' role in Silicon Valley Bank's final days - WSJ

Published 06/15/2023, 03:12 PM
Updated 06/15/2023, 05:00 PM
© Reuters. FILE PHOTO: Customers wait outside as an employee enters the Silicon Valley Bank branch office in downtown San Francisco, California, U.S., March 13, 2023. REUTERS/Kori Suzuki/File Photo
GS
-

(Reuters) -The U.S. Federal Reserve and the Securities and Exchange Commission are investigating Goldman Sachs Group (NYSE:GS)'s role in two deals with Silicon Valley Bank that preceded the latter's collapse, the Wall Street Journal reported on Thursday citing people familiar with the matter.

Silicon Valley Bank had booked a $1.8 billion loss on the sale of a bond portfolio to Goldman. The Wall Street giant was also an underwriter for a failed share sale by the bank that eventually paved the way for its meltdown.

The Fed and the SEC are seeking documents related to Goldman's role as both buyer of the securities portfolio and adviser on the capital raise, the report said.

They are looking to see if Goldman's investment banking side and its trading division were improperly communicating about the portfolio sale, the report added.

Goldman had disclosed last month it was cooperating with government probes into its dealings with Silicon Valley Bank.

"SVB engaged Goldman Sachs to assist with a proposed capital raise and sold the firm a portfolio of securities. Prior to that sale, Goldman Sachs informed SVB in writing that we would not act as their advisor on the sale, and that SVB should not rely on any advice from the bank in this regard, but instead hire a third-party financial advisor," a spokesperson for Goldman said.

Goldman's shares closed up 0.4% at $339.12, after having risen as much as 1.6% earlier in the day.

In March, Reuters reported U.S. prosecutors were investigating the collapse of Silicon Valley Bank. The probe by the Fed and the SEC were part of the broader probes, the WSJ report added.

© Reuters. FILE PHOTO: Customers wait outside as an employee enters the Silicon Valley Bank branch office in downtown San Francisco, California, U.S., March 13, 2023. REUTERS/Kori Suzuki/File Photo

An SEC spokesperson said in an emailed statement the agency "does not comment on the existence or nonexistence of a possible investigation". A spokesperson for the Fed declined to comment.

Silicon Valley Bank's demise sent shockwaves through the industry and brought on the worst crisis for the sector in 15 years.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.