Democratic New Jersey Sen. Bob Menendez grilled former Silicon Valley Bank (SVB) President Greg Becker about selling millions in stock before the bank’s failure in March, during a Senate Banking Committee hearing on Tuesday.
Becker sold the stock shortly before the bank failed on March 10, and Menendez confronted Becker on whether he sold it based on insider information. “On Feb 27, eleven days before your bank failed, you sold $3.6 million worth of stock,” Menendez said before asking, “Were you aware that Silicon Valley Bank was in trouble?”
“No, Senator, I was not,” Becker responded. (RELATED: ‘Bone-Deep Down To The Marrow Stupid’: Sen. Kennedy Grills Silicon Valley Bank CEO On Collapse)
Menendez referenced Becker’s 10b5-1 filing with the Securities and Exchange Commission. Rule 105b-1 enables insiders to sell company stock if they craft a plan in advance outlining the share price, quantity and transaction date, according to Investopedia. The insider selling stock needs to confirm they do not possess knowledge of any significant undisclosed information, known as material nonpublic information. In the filing, Becker said he did not have access to this type of information.
“However, in the past two years, the Federal Reserve issued not one, not two, but 30 supervisory findings, which identified issues in areas like risk management, board effectiveness and interest rates simulation and modeling, all of which directly contributed to the bank’s collapse,” Menendez said. “These findings were not publicly available.”
“All of this happened in a two-year span when you and other executives sold $84 million of SVB stock,” he added. “So, Mr. Becker, do you think supervisory warnings about your firm’s risk management and governance are material information?”
Becker did not answer the question directly, and instead described the process of disclosing regulatory findings. “The question is: ‘Is that material information or not?'” Menendez asked again. “I didn’t believe it was, sir,” Becker answered.
“30 different supervisory findings, all of which are elements of the collapse of the bank, and you didn’t believe those were material findings,” Menendez said.
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