US authorities have launched an investigation into Goldman Sachs‘ work with Silicon Valley Bank (SVB) in relation to the occasions that led to the collapse of the California-based financial institution. Goldman disclosed the probe in a current securities filing, noting that they’re cooperating and providing data to various authorities bodies. The investigation focuses on the bank’s activities for SVB in March, simply earlier than the tech-focused bank’s demise.
Goldman Sachs has confronted criticism over its dual roles with SVB, in which it advised SVB and purchased distressed debt in a deal that played an important part in the bank’s collapse. Free seized SVB on March 10 following a run on deposits. The financial institution reported two days earlier that it had lost US$1.8 billion from the sale of US$21 billion in securities.
On the identical day of the press launch, SVB introduced that it had enlisted Goldman Sachs to help with a deliberate capital increase. The disclosure of the buying and selling losses led to the market decoding the state of affairs as a sign of SVB’s desperation to boost cash to fulfill liquidity wants, finally resulting within the bank’s downfall..