Silicon Valley Bank CEO sold $3.6M of stock two weeks before bank failed

SVB Financial (NASDAQ:SIVB) President and CEO Gregory Becker sold almost $3.6M of SIVB shares about two weeks before the company's Silicon Valley Bank failed when it was unable to raise capital to shore up its liquidity.

SIVB shares fell 63% in the past week as the bank's troubles mounted. With the clients clamoring to withdraw deposits and the bank unable to raise new capital, the Federal Deposit Insurance Corp. closed the bank on Friday. On Wednesday, March 8, the company unveiled a plan to raise more than $2B from the sale of common and preferred stake and disclosed that it sold its available for sale securities portfolio at a $1.8B loss. By the end of trading on Thursday, SIVB stock sank to $106.04. The stock was halted on Friday.

Through a rule 10b5-1 trading plan established on Jan. 26, the CEO sold 12,451 shares in four transactions on February 27 at an average price of ~$287.42 per share. On the same day, Becker had acquired the 12,451 shares through the exercise of derivatives at $105.18 per share. That implies he made ~$2.3M profit from the transactions.

Also on Feb. 27, Chief Financial Officer Daniel Beck sold 2,000 SIVB shares at $287.59 per share, or ~$575K, through a trading plan he entered on Jan. 24.

Note that on Feb. 16, the Seeking Alpha Quant system warned that SVB Financial (SIVB) was at risk of performing poorly. Also, SA contributor CashFlow Hunter flagged the bank's risk for potential losses from its loan portfolio and noted that the funding environment for startups would pressure its deposit base.

Editor's note: A previous version of the story had mistakenly had $3.6B in headline, instead of $3.6M.