Goldman Sachs is being investigated by the Fed and SEC over Silicon Valley Bank’s securities portfolio.

Goldman Sachs is currently under investigation by the Federal Reserve and Securities and Exchange Commission (SEC) for its involvement in the purchase of Silicon Valley Bank’s securities portfolio before the bank collapsed. The Wall Street Journal reported on this, citing sources familiar with the matter. Both agencies are looking into Goldman Sachs’ actions during its failed capital raise before the collapse of SVB. The Justice Department has also issued a subpoena to Goldman Sachs as part of its investigation into SVB. The Federal Reserve and SEC are particularly interested in obtaining documents relating to Goldman Sachs’ dual role as buyer of SVB’s securities portfolio and the advisor for the bank’s capital raise. They are reportedly investigating whether there were improper communications between Goldman’s investment banking division and its trading division regarding the sale of the portfolio. Goldman Sachs has said that it is cooperating with and providing information to various governmental bodies in connection with their investigations and inquiries into SVB, including the firm’s business with SVB in or around March 2023. Goldman Sachs was reportedly hired to assist SVB in raising capital in the final days leading to the collapse of SVB. At the same time, its trading division purchased “SVB’s $21 billion portfolio of available-for-sale debt securities at a discount.” It is considered uncommon for banks to simultaneously act as both an adviser and a buyer of a company’s assets, except in times of financial distress. Sources familiar with the matter have disclosed that Goldman advised SVB executives to “sell part or all of its securities portfolio” before raising capital to demonstrate the need for funding. This advice was reiterated by Greg Becker, SVB’s former CEO, during his testimony before the Senate Banking Committee. Goldman Sachs has stated that it informed SVB in writing that it would not act as their adviser on the sale and that SVB should not rely on any advice from the bank in this regard, but instead hire a third-party financial adviser. On March 10, Silicon Valley Bank was closed down by California regulators, and on March 17, SVB Financial Group filed for Chapter 11 bankruptcy protection in the United States Bankruptcy Court.

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