DoJ and SEC join Fed in examining the SVB's crisis.
Investigations include reviewing SVB Financial executives' shares sales before the collapse.
After the
US Federal Reserve (Fed) declared an internal probe following the collapse of Silicon
Valley Bank (SVB) last week, two more US government bodies want to scrutinize
the causes of the run on the institution's deposits that put it on the brink of
bankruptcy, as stated in The Wall Street Journal (WSJ) report.
SEC and DoJ to Investigate
Silicon Valley Bank Collapse
The
Securities and Exchange Commission (SEC) and the Justice Department (DoJ) have
launched investigations into SVB. According to people familiar with the matter
who wished to remain anonymous, the inspections are in the preliminary stages
and may not necessarily lead to charges.
Conducting
such investigations are often practiced when large financial institutions face
sudden liquidity problems. For example, the purpose of the SEC's and DoJ's probes
may be to identify issues that have arisen at SVB to ensure that they will not
be repeated in the future.
Additionally,
the ongoing investigations are looking into stock sales made by officers of
SVB Financial shortly before the bank's failure. According to the sources, the
Justice Department's fraud prosecutors in both Washington and San Francisco are
involved in the probe.
Shares of SVB Financial, the former owner of SVB, plunged more than 60% during Thursday's session. Thus, the stock exchange decided to halt their quotes due to the increased volatility on Wall Street since Friday.
The dynamic fall
stopped at $106 per share, well below the pandemic 2020 low, testing levels
last seen in 2016. In the
aftermath, the share price of local First Republic Bank also slumped over 60% and Credit Suisse stocks reached a new all-time low. However, Tuesday’s session
brought a visible rebound and a bullish correction of banking shares.
SIVB Shares Tanked More Than 60%. Source: Tradingview.com
Earlier on
Tuesday, Finance Magnates reported that the Fed had launched its own
internal investigation into the collapse of the SVB. Michael S. Barr, the Vice
Chair for Supervision at the central bank, and his team will review how SVB was
regulated and supervised by Fed before its collapse in search of potential
negligence that could explain the reasons for the sudden bankruptcy of the
institution. The final results will be released to the public by 1 May 2023.
What
Happened at Silicon Valley Bank?
Silicon
Valley Bank was established in 1983 to cater to the banking needs of the tech
industry in Silicon Valley. It quickly became one of the largest banking institutions
in the US, offering a variety of products, such as deposit services, loans,
investment products, cash management, and commercial finance.
The bank
saw a significant increase in deposits, reaching $198 billion by the end of the
first quarter of 2022, which was three times more than it had at the end of
2019. This growth was primarily due to the bank's close-knit customer base in
the tech industry. SVB invested in 5-year bonds and 10-year mortgage-backed
securities, generating a fixed return of about 1.5%. However, these investments
turned sour when interest rates increased, and the bank failed to manage its
risks.
The bank's
problems worsened when some of its customers started withdrawing their
deposits, leading to a feedback loop that caused a significant drop in deposits
from $198 billion in March 2022 to $165 billion in February 2023, which is a decrease of
16%. This bank run ultimately led to the SVB's failure. The previous Chief Risk
Officer left in April 2022 and was replaced in January 2023, but it was too
late to save the bank.
After the
US Federal Reserve (Fed) declared an internal probe following the collapse of Silicon
Valley Bank (SVB) last week, two more US government bodies want to scrutinize
the causes of the run on the institution's deposits that put it on the brink of
bankruptcy, as stated in The Wall Street Journal (WSJ) report.
SEC and DoJ to Investigate
Silicon Valley Bank Collapse
The
Securities and Exchange Commission (SEC) and the Justice Department (DoJ) have
launched investigations into SVB. According to people familiar with the matter
who wished to remain anonymous, the inspections are in the preliminary stages
and may not necessarily lead to charges.
Conducting
such investigations are often practiced when large financial institutions face
sudden liquidity problems. For example, the purpose of the SEC's and DoJ's probes
may be to identify issues that have arisen at SVB to ensure that they will not
be repeated in the future.
Additionally,
the ongoing investigations are looking into stock sales made by officers of
SVB Financial shortly before the bank's failure. According to the sources, the
Justice Department's fraud prosecutors in both Washington and San Francisco are
involved in the probe.
Shares of SVB Financial, the former owner of SVB, plunged more than 60% during Thursday's session. Thus, the stock exchange decided to halt their quotes due to the increased volatility on Wall Street since Friday.
The dynamic fall
stopped at $106 per share, well below the pandemic 2020 low, testing levels
last seen in 2016. In the
aftermath, the share price of local First Republic Bank also slumped over 60% and Credit Suisse stocks reached a new all-time low. However, Tuesday’s session
brought a visible rebound and a bullish correction of banking shares.
SIVB Shares Tanked More Than 60%. Source: Tradingview.com
Earlier on
Tuesday, Finance Magnates reported that the Fed had launched its own
internal investigation into the collapse of the SVB. Michael S. Barr, the Vice
Chair for Supervision at the central bank, and his team will review how SVB was
regulated and supervised by Fed before its collapse in search of potential
negligence that could explain the reasons for the sudden bankruptcy of the
institution. The final results will be released to the public by 1 May 2023.
What
Happened at Silicon Valley Bank?
Silicon
Valley Bank was established in 1983 to cater to the banking needs of the tech
industry in Silicon Valley. It quickly became one of the largest banking institutions
in the US, offering a variety of products, such as deposit services, loans,
investment products, cash management, and commercial finance.
The bank
saw a significant increase in deposits, reaching $198 billion by the end of the
first quarter of 2022, which was three times more than it had at the end of
2019. This growth was primarily due to the bank's close-knit customer base in
the tech industry. SVB invested in 5-year bonds and 10-year mortgage-backed
securities, generating a fixed return of about 1.5%. However, these investments
turned sour when interest rates increased, and the bank failed to manage its
risks.
The bank's
problems worsened when some of its customers started withdrawing their
deposits, leading to a feedback loop that caused a significant drop in deposits
from $198 billion in March 2022 to $165 billion in February 2023, which is a decrease of
16%. This bank run ultimately led to the SVB's failure. The previous Chief Risk
Officer left in April 2022 and was replaced in January 2023, but it was too
late to save the bank.
Damian's adventure with financial markets began at the Cracow University of Economics, where he obtained his MA in finance and accounting. Starting from the retail trader perspective, he collaborated with brokerage houses and financial portals in Poland as an independent editor and content manager. His adventure with Finance Magnates began in 2016, where he is working as a business intelligence analyst.
UK's FX Market Soars 14% in April, Driven by Rising Swap Trades
Sherwan Zeybo | FXGT | Executive Interviews
Sherwan Zeybo | FXGT | Executive Interviews
In this video, Sherwan Zeybo, Head of Business Development at @fxgtofficial , discusses the growth and development of the CFD broker since its inception in 2019. Starting with a small team, FXGT has expanded to over 280 employees and obtained multiple licenses across various jurisdictions. Sher highlights the broker's commitment to providing security, transparency, and a comprehensive trading environment for clients. Sherwan also mentions upcoming developments, including a new trading app and a web trading platform, as well as a copy trading and social trading platform.
#financemagnates #fmnews #FXGT #CFDBroker #TradingApp #FinancialServices #customersupport
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In this video, Sherwan Zeybo, Head of Business Development at @fxgtofficial , discusses the growth and development of the CFD broker since its inception in 2019. Starting with a small team, FXGT has expanded to over 280 employees and obtained multiple licenses across various jurisdictions. Sher highlights the broker's commitment to providing security, transparency, and a comprehensive trading environment for clients. Sherwan also mentions upcoming developments, including a new trading app and a web trading platform, as well as a copy trading and social trading platform.
#financemagnates #fmnews #FXGT #CFDBroker #TradingApp #FinancialServices #customersupport
📣 Stay updated with the latest in finance and trading!
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In our discussion with Rhonda K. Müller, CEO of Muinmos, during iFX EXPO International, she covered regulatory changes impacting the trading industry, particularly focusing on new frameworks like MICA and Dora. She highlights the positive effects of regulation, such as increased order and transparency, and predicts that these changes will ignite more competition in the crypto market. Rhonda also touches on the rising trend of prop trading and anticipates future regulations in this area to ensure legitimacy. Finally, she shares Mooz's commitment to digitization and connectivity, aiming to provide comprehensive solutions from investor protection to risk profiling.
#financemagnates #Regulation #CryptoTrading #PropTrading #FinancialMarkets #DigitalTransformation
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Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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In our discussion with Rhonda K. Müller, CEO of Muinmos, during iFX EXPO International, she covered regulatory changes impacting the trading industry, particularly focusing on new frameworks like MICA and Dora. She highlights the positive effects of regulation, such as increased order and transparency, and predicts that these changes will ignite more competition in the crypto market. Rhonda also touches on the rising trend of prop trading and anticipates future regulations in this area to ensure legitimacy. Finally, she shares Mooz's commitment to digitization and connectivity, aiming to provide comprehensive solutions from investor protection to risk profiling.
#financemagnates #Regulation #CryptoTrading #PropTrading #FinancialMarkets #DigitalTransformation
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Tom Higgins | Gold-i
Tom Higgins | Gold-i
In this interview, Tom Higgins, CEO of Gold-i, discusses the convergence of crypto and FX liquidity. He explains the challenges of accessing crypto liquidity and how different execution methods, such as iceberg orders, help manage large transactions. Tom addresses the impact of AI in trading, emphasizing its use in sentiment analysis and trading pattern recognition. He also talks about the significance of Bitcoin ETFs in boosting institutional confidence in crypto markets. Lastly, Tom outlines the growth and future plans for Gold-i, focusing on enhancing their Matrix Net technology and expanding their role in crypto liquidity aggregation.
#financemagnates #CryptoLiquidity #FXLiquidity #AIinTrading #BitcoinETF #TradingTechnology
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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▶️ Telegram: https://t.me/financemagnatesnews
Don't miss out on our latest videos, interviews, and event coverage.
🔔 Subscribe to our YouTube channel for more!🔔
In this interview, Tom Higgins, CEO of Gold-i, discusses the convergence of crypto and FX liquidity. He explains the challenges of accessing crypto liquidity and how different execution methods, such as iceberg orders, help manage large transactions. Tom addresses the impact of AI in trading, emphasizing its use in sentiment analysis and trading pattern recognition. He also talks about the significance of Bitcoin ETFs in boosting institutional confidence in crypto markets. Lastly, Tom outlines the growth and future plans for Gold-i, focusing on enhancing their Matrix Net technology and expanding their role in crypto liquidity aggregation.
#financemagnates #CryptoLiquidity #FXLiquidity #AIinTrading #BitcoinETF #TradingTechnology
📣 Stay updated with the latest in finance and trading!
Follow Finance Magnates for news, insights, and event updates across our social media platforms. Connect with us today:
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Throwback to FMLS:23 | FMvoices
Throwback to FMLS:23 | FMvoices
FMvoices are here to confirm all the great things you've heard about our events ✨ At the same time, it's a throwback to our very successful FMLS:23 and we want to give out a special thank you to everyone who took the time to talk to us during the busy hours of the expo!
Ugnė B., payabl.
Joe Pelley, ActivTrades
William Thomas, BVNK
Got FOMO? Register now and secure your spot to the most premium financial event of London 🔗 https://events.financemagnates.com/EmKzD?utm_source=linkedin&utm_campaign=FMvoices-FMLS23&utm_medium=video&RefId=FMvoices+FMLS23
#fmls24 #fmls24 #fmls #fmevents #London #networking #financesummit
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Don't miss out on our latest videos, interviews, and event coverage.
Subscribe to our YouTube channel for more!
FMvoices are here to confirm all the great things you've heard about our events ✨ At the same time, it's a throwback to our very successful FMLS:23 and we want to give out a special thank you to everyone who took the time to talk to us during the busy hours of the expo!
Ugnė B., payabl.
Joe Pelley, ActivTrades
William Thomas, BVNK
Got FOMO? Register now and secure your spot to the most premium financial event of London 🔗 https://events.financemagnates.com/EmKzD?utm_source=linkedin&utm_campaign=FMvoices-FMLS23&utm_medium=video&RefId=FMvoices+FMLS23
#fmls24 #fmls24 #fmls #fmevents #London #networking #financesummit
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FMvoices are here to confirm all the great things you've heard about our events ✨ #fmevents #fmls24
FMvoices are here to confirm all the great things you've heard about our events ✨ #fmevents #fmls24