The US Federal Reserve and Securities and Exchange Commission have started investigating the role Goldman Sachs played in purchasing Silicon Valley Bank's securities portfolio in the run-up to its collapse, the Wall Street Journal has reported.
Goldman Sachs was both buyer of SVB's securities portfolio and adviser on its capital raise, with the investigation examining whether its investment banking arm and trading division improperly communicated.
In the weeks before it collapsed, SVB hired the bank to help it raise capital, while its trading division bought SVB's $21bn portfolio of available-for-sale debt securities at a discount to market value.
Meanwhile, the Justice Department has allegedly subpoenaed Goldman Sachs as part of its investigation into the SVB collapse.
Goldman Sachs said in a securities filing last month that "various governmental bodies" were investigating its involvement with SVB.
The bank added it was "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".
Greg Becker, former CEO of SVB, told the Senate Banking Committee last month that SVB was told by Goldman Sachs it needed to sell part or all of its securities portfolio to illustrate a need for capital before they could raise capital.
A Goldman Sachs spokesperson told the WSJ that before the portfolio sale, it "informed SVB in writing that we 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".
Goldman Sachs has been contacted for comment.
