In a securities filing on Thursday, Goldman Sachs revealed that US regulators were looking into its work for Silicon Valley Bank in relation to the circumstances surrounding the California bank’s collapse.
According to the document, Goldman is “cooperating with and providing information to various governmental bodies” regarding its actions for SVB in March, just before the tech-oriented bank failed, AFP reported.
Goldman has been under fire for its many roles with SVB, including the advice it provided to the California bank and the deal it made to buy distressed debt, which ultimately played a major part in SVB’s demise.
Federal financial authorities took control of SVB on March 10 as a result of a run on the bank, two days after it announced losses of $1.8 billion on the sale of $21 billion in securities.
In the same March 8 press release, SVB said it enlisted Goldman in connection with a planned capital raise.
Markets perceived SVB’s revelation of the trading losses as a symptom of its urgency to obtain money in order to fulfil its liquidity needs at a time when the bank was experiencing deposit flight, which ultimately resulted in the bank’s failure.
The government investigations “involved when SVB engaged the firm to assist with a proposed capital raise and SVB sold the firm a portfolio of securities,” according to Goldman’s disclosure on Thursday.
The government inquiries come in response to a request made to US regulators by 20 House Democrats, who urged an inquiry into whether Goldman “operated at ‘arm’s length’ in their role as advisor for SVB.”
