US authorities have launched an investigation into Goldman Sachs‘ work with Silicon Valley Bank (SVB) in relation to the events that led to the collapse of the California-based financial institution. Goldman disclosed the probe in a recent securities filing, noting that they’re cooperating and providing info to numerous government our bodies. The investigation focuses on the bank’s activities for SVB in March, simply before the tech-focused bank’s demise.
Goldman Sachs has faced criticism over its dual roles with SVB, by which it suggested SVB and purchased distressed debt in a deal that played a crucial half within the bank’s collapse. Federal banking regulators seized SVB on March 10 following a run on deposits. The bank reported two days earlier that it had misplaced US$1.8 billion from the sale of US$21 billion in securities.
On the same day of the press release, SVB announced that it had enlisted Goldman Sachs to assist with a deliberate capital raise. Secrets of the trading losses led to the market deciphering the situation as an indication of SVB’s desperation to boost cash to satisfy liquidity wants, in the end resulting in the bank’s downfall..