are investigating Silicon Valley Bank

after it collapsed in March.

According to exclusive reporting by the Wall Street Journal

Dave Michaels, a reporter covering white collar crime

and financial enforcement at the Journal

breaks down what investigators are probing.

(gentle suspenseful music)

- SVB fell victim to a bank run.

It was a bank run and sort of the classic sense

where depositors all sought their money back

at the same time, 42 billion worth of deposits

slow down of the bank on one date.

It's very common for the Justice Department

and the Securities and Exchange Commission to investigate

after a big public company or a bank fails

or any other kind of very negative market event.

SVB Financial Group is a public company

who's shares are traded publicly

and it owned Silicon Valley Bank.

The SEC is likely to examine what the public company said

about the risks to Silicon Valley Bank.

Did the public company disclose all the facts and risks

that shareholders needed

in order to make informed investment decisions?

The Justice Department can look at a broader set of facts.

Their jurisdiction is not just limited

to capital markets or public companies

so it's likely that the DOJ could be looking at matters

that are a little bit broader

than just how the, how the public company worked.

Technically, DOJ and SEC investigations are separate

but it is not unusual that the two agencies cooperate.

In the end they make, you know, separate decisions

sometimes on different timetables

about whether to bring charges or civil claims.

The two agencies are also, as we understand it,

looking at trades, stock sales

that the CEO and CFO of the public company made

in close proximity to the bank's failure.

So about three weeks before the bank failed

the CEO and the CFO sold in total

what amounts to about 2.7 or $2.8 million worth of stock.

Anytime you see stock sales in close proximity

to a very negative event, it raises the suspicions

of a lot of people, including regulators in law enforcement

and they are going to look at the stock sales,

try to find out if the executives had material,

non-public information, that wasn't known to the market.

And if they had that, if they were in possession of that,

then they weren't supposed to trade.

The Justice Department is conducting

as far as we know, a criminal investigation.

The SEC is a civil regulatory agency

so its authority is limited

to fining companies, civil penalties that is.

There isn't a timeframe that the SEC

or the DOJ have to stick to.

There is gonna be a period here

where the SEC is doing some investigations

whether they lead to any lawsuits or claims of wrongdoing?

It's impossible to know at this point

and we might not know for a while.

(melancholic music)