- Sachs served as adviser for SVB’s capital raise
- They also bought the bank’s securities portfolio
- Sachs denies any involvement in SVB affairs
Goldman Sachs is being scrutinized by the US Federal Reserve and Securities and Exchange Commission (SEC) with regard to its purchase of Silicon Valley Bank’s (SVB) securities before the bank became insolvent, The Wall Street Journal has reported, citing insiders.
Insiders report that both the Fed and SEC are probing Goldman Sachs’ actions during the unsuccessful capital raise before SVB went under. Allegedly, the US Department of Justice has issued a subpoena to Goldman Sachs as it investigates the SVB case.
Improper communications
The Federal Reserve and SEC want to get their hands on documents proving Goldman Sachs’ dual role. The corporation served as adviser for SVB’s capital raise and also purchased the bank’s securities portfolio. Reportedly, the agencies are investigating into the presence of any “improper communications” about the portfolio’s sale between Goldman’s trading division and its investment banking division.
Goldman assures it is cooperating with governmental bodies.
Goldman’s lucrative crypto strategy
In the days before SVB declared bankruptcy, they reportedly hired Goldman Sachs to help it raise capital. Goldman’s trading division bought its debt security portfolio, worth around $21 billion, around the same time. They made this purchase at a discount.
It’s not common for entities to buy a company’s assets and act as an adviser to them at the same time, unless the client is in financial distress.
This is not the first time Goldman is applying this strategy. Last year, they tried to raise $2 billion from investors to purchase crypto lender Celsius’ assets, when Celsius was facing insolvency.
Goldman advised SVB to sell its securities
Insiders told the WSJ that Goldman had advised SVB to “sell part or all of its securities portfolio” prior to the capital raise to show they needed funding. Ex-SVB CEO Greg Becker repeated this during his hearing before the Senate Banking Committee.
Involvement denied
Goldman has denied advising SVB on anything. A spokeswoman stated that Goldman told SVB not to rely on any advice from them, but to appoint a third-party financial adviser instead.
Before SVB was closed down on March 10, it was the 16th largest bank in the country with assets worth over $212 billion. The bank filed for bankruptcy a week later.
