US authorities are investigating work Goldman Sachs did for Silicon Valley Bank in the weeks before it failed, including its advice that the smaller lender sell a large portfolio of losing securities, according to a Goldman regulatory filing on Thursday.
Goldman said it was “cooperating with and providing information to various government agencies in connection with their investigations and inquiries” into Silicon Valley Bank, which suddenly collapsed on March 10, triggering a crisis of confidence that has led to the bankruptcy of two other regional banks. . lenders and stock market panic over the fate of others.
The investigations include “the company’s dealings with SVB around March 2023, when SVB retained the company to assist with a proposed capital increase and SVB sold the company a portfolio of securities,” Goldman’s filing said. Securities and Exchange Commission.
Goldman investment bankers advised Silicon Valley Bank leaders to sell a $21 billion portfolio of US government debt that had fallen in value sharply from rising interest rates. Silicon Valley Bank did so in a matter of hours, later revealing that it had suffered a $1.8 billion loss on the move. Goldman also tried to arrange the sale of Silicon Valley Bank shares.
Silicon Valley Bank depositors withdrew billions of dollars in response to the news, a run that ended with their seizure by the Federal Deposit Insurance Corporation. Days later, another institution, Signature Bank, also collapsed, and regulators this week seized and sold First Republic Bank.
Since the crisis began, shares in a number of smaller banks have taken a hit as investors try to place bets on which might be next to fall. The fall in the share prices of companies like PacWest Bancorp and Western Alliance has come even as lenders have tried to reassure investors that they are financially sound.
Goldman did not specify which regulators were conducting the investigation. In March, days after the Silicon Valley Bank collapsed, a group of Democratic lawmakers in the House of Representatives sent a letter to the heads of the SEC, FDIC, and Justice Department, asking them to investigate the role of Goldman Sachs as adviser to the smaller bank.
A Goldman Sachs spokeswoman declined to comment further.