The Justice Department and the US Securities and Exchange Commission have launched an investigation into the collapse of Silicon Valley Bank, two people familiar with the matter told The Associated Press on Wednesday.
The investigations, which will be carried out separately, are in their preliminary stages and will also cover actions by company executives, the people said.
The Justice Department’s investigation involves federal prosecutors in California, along with prosecutors involved in fraud cases, they added.
The people spoke on condition of anonymity because they are not authorized to comment on specific details of the ongoing investigations.
The collapse of Silicon Valley Bank on Friday — the biggest of its kind since the 2008 financial crisis — and that of Signature Bank two days later have rattled markets at a time when investors hedge on the safety of bonds, amid renewed concerns about problems in the banking sector.
On Wednesday, Credit Suisse, which had been beset by problems long before Silicon Valley Bank collapsed, saw its shares hit their lowest level in history after the institution’s largest shareholder refused to provide further support. .
The Federal Reserve is facing criticism for failing to detect what experts say were clear signs that Silicon Valley Bank was at high risk of default.
And a class action lawsuit has been filed against Silicon Valley Bank’s parent company, its CEO and CFO, alleging that the bank failed to disclose the risks that future interest rate increases would have on the business.
As part of its investigation, the Securities and Exchange Commission has begun the process of seeking documents by issuing notices, said one of the people familiar with the matter. A notice requires the recipient to preserve relevant documents and information stored electronically.
