CEO of Silicon Valley Bank sold $3.57 million of stock before its dramatic collapse 

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The CEO of Silicon Valley Bank sold $3.57m of stock in a pre-planned, automated sell-off two weeks before it collapsed – and the CFO ditched $575,000 the same day.

Greg Becker sold 12,451 shares at an average price of $287.42 each on February 27. The price plunged to just $39.49 in premarket Friday before the Federal Deposit Insurance Corporation (FDIC) seized the bank’s assets.

The day his sale went through, Becker bought the same number of shares using stock options priced at $105.18 each, according to filings with the Securities and Exchange Commission. The options, which allow you to buy a company’s stock at a set price, were due to expire May 2. The transactions were made through a trust that he controls, using a trading plan that he had set up on January 26, records show.

SVB’s CFO Daniel Beck sold 2,000 shares at $287.59 per share on the same day as his boss. He set up his trading plan on January 24.

Company insiders often use such plans to execute trades when certain conditions are met, such as price and volume. This serves to remove any potential that they may use their knowledge to beat the market. 

Greg Becker sold 12,451 shares at an average price of $287.42 each on February 27

CFO Daniel Beck sold 2,000 shares at $287.59 per share on the same day as his boss

Greg Becker (left) sold 12,451 shares at an average price of $287.42 each on February 27. SVB’s CFO Daniel Beck (right) sold 2,000 shares at $287.59 per share on the same day as his boss. The price plunged to just $39.49 in premarket Friday before the Federal Deposit Insurance Corporation (FDIC) seized its assets.

Greg Becker sold 12,451 shares at an average price of $287.42 each on February 27. The price plunged to just $39.49 in premarket Friday before the Federal Deposit Insurance Corporation seized its assets

There is no suggestion of any impropriety by either Becker or Beck. 

Before Becker’s latest plan was executed, he last sold stock on December 1, 2021. In that sale there were 12,500 shares for $8.7 million, an average price of $698.69 each.

The same day he exercised stock options to acquire 12,500 shares, and the sales were facilitated through a trading plan that had been set up on October 26, 2021. 

The FDIC rushed to seize the assets of SVB Friday after it experienced a run on the bank in the largest failure of a financial institution since Washington Mutual during the Great Recession of 2008.

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Little known to the general public, SVB specialized in financing start-ups and had become the 16th largest US bank by assets: at the end of 2022, it had $209 billion in assets and approximately $175.4 billion in deposits.

Its demise represents not only the largest bank failure since Washington Mutual in 2008, but also the second largest failure ever for a retail bank in the United States.

In response to the sudden collapse, Treasury Secretary Janet Yellen convened an emergency meeting of top US banking regulators.

‘Secretary Yellen expressed full confidence in banking regulators to take appropriate actions in response and noted that the banking system remains resilient and regulators have effective tools to address this type of event,’ a Treasury statement said.

Based in the shadow of the world’s biggest tech companies, SVB’s travails have raised fears that more banks may face doom as the fallout from high inflation and hiked interest rates squeezes weaker lenders.

In front of the SVB headquarters on a rainy day in Santa Clara, California, nervous customers spoke in small groups wondering how they could withdraw their money as news spread of the government seizure.

One customer dressed in a t-shirt and sweatpants, and who spoke on condition of anonymity, said he used the bank for payroll at his startup.

‘It’s not a good situation. A lot of really top tier (venture capital firms) have very high amounts of exposure here,’ he said, adding that he was worried for his employees.

A Brinks security truck is parked outside the Silicon Valley Bank in Santa Clara as investors line up outside after the bank shut its doors. The Federal Deposit Insurance Corporation (FDIC) seized SVB's assets today as depositors - mostly tech workers and start-up firms - began withdrawing their money following the shock announcement of a $1.8bn loss

A Brinks security truck is parked outside the Silicon Valley Bank in Santa Clara as investors line up outside after the bank shut its doors. The Federal Deposit Insurance Corporation (FDIC) seized SVB’s assets today as depositors – mostly tech workers and start-up firms – began withdrawing their money following the shock announcement of a $1.8bn loss

Police were called after 'about a dozen' financiers, including former Lyft executive Dor Levi, showed up outside the building on Park Avenue as a run on the bank Friday morning forced the Federal Deposit Insurance Corporation to seize its assets. SVB blocked them from entering and two cop cars arrived to tell the investors to get out of the building.

Police were called after ‘about a dozen’ financiers, including former Lyft executive Dor Levi, showed up outside the building on Park Avenue as a run on the bank Friday morning forced the Federal Deposit Insurance Corporation to seize its assets. SVB blocked them from entering and two cop cars arrived to tell the investors to get out of the building.

A day after the four biggest US banks lost a whopping $52 billion in market value following signs of trouble at SVB, European banking giants were similarly mired in the red, with Deutsche Bank down 10 percent at one stage.

But on Wall Street on Friday, shares in heavyweights Bank of America, Wells Fargo and Citibank seesawed, with Yellen telling a congressional panel that she was ‘monitoring’ a few banks.

This was swiftly followed by news that the California Department of Financial Protection and Innovation (DFPI) closed SVB and appointed the Washington-based Federal Deposit Insurance Corporation to take it over.

The crisis measure protects customers with up to $250,000 in deposits and crucially buys time to find a potential buyer of whatever remains of the embattled Silicon Valley lender.

CNBC reported Friday that SVB was in talks with potential buyers after attempts to ride out the crisis on its own failed.

‘The debate today is whether SVB issues are SVB’s issues or the start of a bigger issue for the banking sector,’ said a note from Patrick O’Hare of Briefing.com.

‘There seems to be an allowance in the stock market for it being more of a company-specific problem or at least not a debilitating systemic issue.’

Before the closure, trading in SVB itself was halted Friday after the bank saw more than 60 percent of its value wiped out, following the disclosure it had lost $1.8 billion in securities sales in an effort to raise funds.

Investors fear that other banks could face similar losses as they look to raise cash amid ever rising interest rates with central banks moving aggressively to tame decades-high inflation.

‘We’ll have to see how this story develops but something always breaks hard during or after a Fed hiking cycle,’ Deutsche Bank analysts said in a note.

‘Is this another mini wobble on this front or the start of something bigger? Tough to tell, but I would be stunned if there weren’t many more casualties of this boom-and-bust cycle.’

As its name implied, SVB was a major financial conduit between the technology sector, its founders and startups as well as its workers. Hundreds of companies held their operating capital with the bank, and it was seen as good business sense to develop a relationship with Silicon Valley Bank if a founder wanted to find new investors or go public.

‘We saw building a relationship with Silicon Valley Bank as a logical step, given their reach,’ said Ashley Tyrner, CEO of FarmboxRx, a company that delivers food as medicine to Medicaid and Medicare recipients. While Tyrner has money in other banks and can make payroll, she said a good portion of her business’ profits are now locked up with the bank.

But the bank’s connections to the tech sector became a liability rapidly. Technology stocks have been hit hard in the past 18 months after a growth surge during the pandemic and layoffs have spread throughout the industry.

At the same time, the bank was hit hard by the Federal Reserve’s fight against inflation and an aggressive series of interest rate hikes to cool the economy.

As the Fed raises its benchmark interest rate, the value of bonds, typically a stable asset, start to fall. That is not typically a problem as the declines lead to ‘unrealized losses,’ or losses that are not counted against them when calculating the capital cushion than banks can use should there be a downturn in the future.

However, when depositors grow anxious and begin withdrawing their money, banks sometimes have to sell those bonds before they mature to cover that exodus.

That is exactly what happened to SVB, which had to sell $21 billion in highly liquid assets to cover the exodus of deposits. It took a $1.8 billion loss on that sale.

Tyrner said she’s spoken to several friends who are backed by venture capital. She described those friends as being ‘beside themselves’ over the bank’s failure. Tyrner’s chief operating officer tried to withdraw her company’s funds on Thursday, but failed to do so in time.

‘One friend said they couldn’t make payroll today and cried when they had to inform 200 employees because of this issue,’ Tyrner said.