Goldman Sachs under investigation by the Fed and the SEC for its role in the collapse of the Silicon Valley Bank

Goldman Sachs is currently under investigation by the Federal Reserve (Fed) and the US Securities and Exchange Commission (SEC) due to its involvement in the last days of the ill-fated Silicon Valley Bank (SVB), which collapsed last March. , as reported on Thursday by The Wall Street Journal (WSJ).

Citing anonymous sources, the financial newspaper explained that the investigations centered on the fact that the Wall Street giant acquired a part of SVB’s share portfolio while simultaneously working with the bank on a capital-raising operation, which failed and caused the collapse of the entity.

According to the WSJ, the Fed and the SEC have requested documents related to the matter and are investigating whether the Goldman divisions in charge of each of those operations were exchanging information in an unauthorized manner.

Goldman Sachs played a significant role in SVB’s waning days, as the firm was brought in to help raise new capital and, at the same time, its stock trading division bought $21 billion worth of shares in the portfolio of bank investments at a price below market value.

Silicon Valley Bank incurred a $1.8 billion loss on that sale and immediately announced a stock issue to raise funds. These actions generated panic and led many clients to withdraw their money, which ultimately led to the bank’s downfall.

K. Tovar

Source: Bancaynegocios

(Reference image source: Mariia Shalabaieva, Unsplash)

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