Wednesday, March 22, 2023

SVB: US Department of Justice to probe SVB collapse: Report – Usky News

Washington: The US Department of Justice (DOJ) has opened an investigation into the collapse of Silicon Valley Bank ,svb) last week as customers rushed to withdraw their deposits, US media reported on Tuesday.
The investigation into the California lender’s rapid demise is in its early stages, according to reports in the New York Times, Washington Post and Wall Street Journal.
The Journal, which reported on the DOJ investigation, also reported that US Securities and Exchange Commission (SEC) has launched an investigation, while the Times reported that they were considering doing so.
Both agencies declined to comment on the report.
The collapse of SVB sparked widespread concern in financial markets, with two more banks collapsing amid pressure on regional lenders.
The bank’s decision to invest its high-tech customers’ deposits in long-dated, low-yield bonds left it more exposed to interest-rate risk when the Federal Reserve began raising its benchmark last year.
When the era of historically low interest rates ended, high-tech funding dried up, and SVB’s customers began withdrawing their money to pay their bills. This left the bank with no option but to realize its losses on those bonds, leading to a bank run among concerned depositors.
SEC Chairman Gary Gensler said in a statement released last night that the agency is “particularly focused on monitoring market stability and identifying and prosecuting any forms of misconduct that harm investors, capital formation, Or endanger the markets more broadly.”
“If we find violations of federal securities laws, we will investigate and take enforcement action,” he said, without naming any companies.


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