SEC Investigated First Republic Bank Insider Trading Before Selling To JPMorgan

Key Points:

• The US SEC is investigating whether First Republic executives engaged in insider trading.
• The action was taken before the government seized and sold the bank to JPMorgan Chase & Co.
• It has not been identified which former executives are the focus of the investigation. No one formerly or currently employed by the bank has been accused of misconduct.

The SEC scrutinized First Republic’s trading activity before the bank collapsed and was seized by the government to be sold to JPMorgan, according to Bloomberg.

One of the persons, who requested anonymity because the investigation hasn’t been made public, said the SEC is looking into whether any former First Republic executives inappropriately traded on inside information.

It was not immediately clear who former executives were the investigation’s subject. No one has been charged with wrongdoing in the past or present at the bank, and the inquiry may come to a close without any charges being brought against anybody.

On May 1, US authorities officially took over First Republic Bank and sold its assets to the largest bank in the country, JPMorgan Chase. According to CNN, this is US history’s second largest bank failure.

Like Silvergate Bank, Silicon Valley Bank (SVB), or Signature Bank, the collapse of First Republic was partly caused by the Fed’s prolonged interest rate hike campaign. When interest rates rise, bank investments – especially long-term bonds – depreciate, and this leads to the banking system in the US suffering billions of dollars in paper losses. First Republic was seized by regulators and sold to JPMorgan on Monday in a government-led deal following a dramatic weekend.

Separately, the SEC probed the trading activity of Silicon Valley Bank executives before it collapsed in March.

Under the pressure of the Fed to raise interest rates, banks also had to increase deposit rates to compete with other competitors to attract customers. That puts great pressure on regional and mid-range banks, typically those that customers massively withdrew during the crisis in March.

DISCLAIMER: The Information on this website is provided as general market commentary and does not constitute investment advice. We encourage you to do your own research before investing.

Join us to keep track of news: https://linktr.ee/coincu

Foxy

Coincu News