A group of lawmakers recently forwarded correspondence to the Securities and Exchange Commission (SEC) outlining concerns regarding large Silicon Valley Bank (SVB) executive stock trades before the bank’s collapse.
Senate Committee on Banking, Housing, and Urban Affairs Chairman Sherrod Brown (D-OH) joined 11 committee colleagues in signing off on the letter to SEC Chairman Gary Gensler.
“We write regarding recent news reports of executives at Silicon Valley Bank (SVB) selling millions of dollars’ worth of company stock in the days and months leading up to SVB’s failure,” the legislators wrote. “Our capital markets are based upon the ironclad trust that corporate insiders act in the best interest of their shareholders and not in their own self-interest. Addressing breaches of that trust is of paramount importance.”
According to the lawmakers, the magnitude and timing of SVB stock sales raise serious questions, and in the correspondence, they requested the SEC’s examination of the sales.
“We believe that given the circumstances of the SVB Group stock sales, the SEC must thoroughly review the circumstances of all the recent transactions,” the legislators concluded. “In fact, the sharp decline in the stock prices of several financial institutions means broader analysis may be necessary. While we expect the SEC’s amendments to Rule 10b5-1 will increase transparency and reduce gaming of stock sales, the SEC must evaluate compliance and enforce violations when appropriate.”
According to the lawmakers, trust that the nation’s markets operate fairly and efficiently for investors is the foundation of the financial system.
“Should regulators require additional tools in order to promote transparency and protect shareholders, we stand ready to work with you on such measures,” the legislators wrote.