Home » US business news » Federal Reserve and SEC investigating Goldman Sachs’ role in SVC’s failure
Federal Reserve and SEC investigating Goldman Sachs’ role in SVC’s failure
https://www.whatjobs.com/news/usa/us-business-news/federal-reserve-and-sec-investigating-goldman-sachs-role-in-svcs-failure
By Nithya Bose in US business news, posted June 16, 2023
The Federal Reserve and the Securities and Exchange Commission are reportedly probing Goldman Sachs Group's role in two transactions with Silicon Valley Bank that preceded the bank's collapse.
Silicon Valley Bank suffered a $1.8 billion loss from selling a bond portfolio to Goldman Sachs.
Goldman Sachs also acted as an underwriter for a failed share sale by the bank, which ultimately led to its meltdown.
Read More: Goldman Sachs prepares for third batch of layoffs as deals decline
The Federal Reserve and SEC are seeking documents related to Goldman's involvement as both the buyer of the securities portfolio and the advisor on the capital raise.
They are investigating potential improper communication between Goldman's investment banking division and its trading division regarding the portfolio sale.
Goldman Sachs announced last month it was cooperating with government investigations into its dealings with Silicon Valley Bank.
Read More: First Citizens axes 500 employees from former Silicon Valley Bank
Goldman Sachs spokesperson clarified the firm was engaged by Silicon Valley Bank to assist with a proposed capital raise and to purchase a portfolio of securities.
They said the bank explicitly informed SVB in writing it would not act as an advisor on the sale and advised the bank to seek guidance from a third-party financial advisor.
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SVB’s fall significantly impacted the industry, resulting in the worst crisis the sector has experienced in 15 years.
The Federal Reserve and SEC investigation is part of a broader probe into the collapse of Silicon Valley Bank.
Both declined to respond to requests from the Wall Street Journal for comment.
The demise of Silicon Valley Bank sent shockwaves through the industry, highlighting the importance of ongoing investigations and the need to address the crisis in the sector.
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