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Goldman Sachs Group Inc.’s stock fell back Thursday after bigger gains earlier in the session after the Wall Street Journal reported that the Securities and Exchange Commission is investigating the role of the bank in buying securities from Silicon Valley Bank prior to that bank’s collapse in March.
A spokesperson for Goldman Sachs said the bank had urged Silicon Valley Bank to hire an outside adviser regarding a proposed sale of securities to cover a sudden drop in deposits at the bank in early March.
Goldman Sachs’s stock rose 0.1%, after rising more than 1% prior to the report.
Citing people familiar with the probe, the newspaper reported that the SEC and the U.S. Federal Reserve are requesting information about the role of Goldman Sachs
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as both a purchaser of securities in Silicon Valley Bank’s portfolio and as an adviser on a capital raise for the bank that was proposed in the days leading up to the bank’s takeover by federal regulators on March 10.
The Journal article said regulators are focusing on whether investment bankers at Goldman Sachs and the bank’s trading unit were communicating improperly about the portfolio sale.
The Justice Department has also issued a subpoena to Goldman as part of its broader investigation of Silicon Valley Bank, the newspaper reported.
The inquiries are included in a broader probe that has been publicly disclosed.
A spokesperson for Goldman Sachs said Silicon Valley Bank hired Goldman Sachs to assist with a proposed capital raise and sold the firm a portfolio of securities.
“Prior to that sale, Goldman Sachs informed SVB in writing that we would not act as their advisor 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 advisor,” the Goldman spokesperson said in an email to MarketWatch.
Goldman has already publicly disclosed in its quarterly 10-Q filed on May 4 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,” the spokesperson said.
In an email to MarketWatch, a spokesperson for the Securities and Exchange Commission said, “The SEC does not comment on the existence or nonexistence of a possible investigation.”
The moves by regulators came after Goldman Sachs worked on the sale of securities by Silicon Valley Bank ahead of its collapse.
Regulators may take an interest in such deals to spot potential conflicts that could possibly arise if a trading unit of a bank internally gets nonpublic information on a security prior to or during an offering.
The probe marks yet another challenge facing Goldman Sachs CEO David Solomon, who has been running into conflicts of late with some of the bank’s 420 partners, as reported by the Wall Street Journal.
