The logo of investment bank Goldman Sachs on the floor of the New York Stock Exchange in July 2021. Richard Drew (AP)
The Wall Street Journal newspaper announced in an exclusive publication Thursday that the Federal Reserve (Fed) and the Securities and Exchange Commission (SEC) are investigating Goldman Sachs over the purchase by Goldman Sachs to secure Silicon Valley Bank’s (SVB) securities portfolio while helping it raise capital before it went bankrupt in mid-March, sources familiar with the case told the newspaper.
According to the sources consulted, the Justice Department has also subpoenaed Goldman Sachs as part of its investigation into SVB. The Wall Street Journal previously reported that the bank’s bankruptcy was under investigation by the SEC and the Justice Department. According to these sources, Goldman’s investigation is part of a larger investigation.
The Federal Reserve and SEC are seeking documents related to Goldman Sachs’ role as buyer of the securities portfolio and adviser on SVB’s capital increase, sources familiar with the case said. The objective is to determine whether Goldman’s investment bank and its trading department improperly exchanged information regarding the sale of the regional bank’s portfolio.
Goldman said in a securities statement last month that “various government agencies” were investigating the bank’s relationship with SVB. The Wall Street company then said it was “cooperating with and providing information to various government agencies in connection with their inquiries and investigations into SVB, including the company’s dealings with SVB on or about March 2023,” which is immediately prior to the Insolvency. which created a $20,000 million hole.
Goldman played an important role in the final days of SVB. Well-established with clients and technology companies, the regional bank hired Goldman to help raise capital. Goldman’s division, in turn, purchased SVB’s $21 billion portfolio of available-for-sale debt securities at a discount to their market value.
Banks rarely act simultaneously as advisors to a company and buyers of its assets, except in times of financial stress, say bankers and bank attorneys, which is why Golman’s alleged use of confidential confirmations has come under scrutiny. Sachs.
Goldman bankers told SVB executives that before raising capital, the bank would have to sell some or all of its shares to demonstrate a need for such capital, the newspaper reported. Former SVB CEO Greg Becker testified before the Senate Banking Committee in May.
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