Silicon Valley Bank CEO sold stock before collapse

According to media reports, Silicon Valley Bank (SVB) paid annual bonuses to all eligible employees, while its CEO encashed stock options ahead of the collapse.

SVB CEO Greg Baker sold $2.27 million of bank stock on February 27, according to an SEC filing. The sale was part of a 10b5-1 that Baker filed on January 26.

Another SEC filing revealed that Baker sold $1.1 million in shares in January to cover a tax liability. According to the filing, the CEO sold most of his stock between $285 and $302.

Meanwhile, a CNBC report said that top executives including the CEO of the beleaguered bank sold shares worth $4.5 million before the collapse.

SVB paid bonus hours before FDIC took control

Axios reported that SVB paid eligible US employees their annual bonuses on March 10—just hours before the Federal Deposit Insurance Corporation (FDIC) took over the bank.

However, the payments appear to be a coincidence, as they fell on the same day the bank collapsed. The bonuses were due for 2022 and were previously scheduled for March 10.

Employees in other countries were scheduled to be paid at the end of the month. But with the FDIC now in control of the bank, it’s unclear whether the payments will proceed as planned. Meanwhile, the government agency has offered to retain some bank employees for up to 45 days to aid in the transition.

Will SVB get bailout?

These new revelations add to the spotlight on SVB. It is the biggest US bank to collapse since the 2008 financial crisis, and many stakeholders are already calling for a government bailout.

Billionaire investor Bill Ackman to plead Government to bail out the bank as many large venture capital-backed companies use it. According to Ackman, a failure of the SVB could be disastrous for the economy.

Ackman noted that no other private bank was likely to bail out SVB, given that the regulator bailed out Bear Stearns with JPMorgan.

He added:

“To be clear, the bailout should be designed to protect SVB depositors, not equity holders or management. We should not reward poor risk management or protect shareholders from risks they have knowingly assumed.

Crypto Community Lampoon Regulator

Many crypto community members have pointed to the failure of SVB as evidence of the hypocrisy of US.. regulators and policy makers.

Anti-crypto lawmaker Senator Elizabeth Warren has come under particular criticism tweetyng Regarding fake crypto audits when regulated banks are collapsing.

Ari Paul, Founder of BlockTower Capital Tweeted“Silvergate has fulfilled all withdrawal requests. The huge non-crypto bank SVB has forced a lot of good companies into bankruptcy.”