Outside Topic SVB - Printable Version
+- The CardBoard (https://thecardboard.org/board)
+-- Forum: C-House! (https://thecardboard.org/board/forum-4.html)
+--- Forum: The CardBoard (https://thecardboard.org/board/forum-5.html)
+--- Thread: Outside Topic SVB (/thread-24098.html)
+- The CardBoard (https://thecardboard.org/board)
+-- Forum: C-House! (https://thecardboard.org/board/forum-4.html)
+--- Forum: The CardBoard (https://thecardboard.org/board/forum-5.html)
+--- Thread: Outside Topic SVB (/thread-24098.html)
RE: SVB - cardcrimson - 03-12-2023
(03-12-2023, 01:20 PM)BostonCard Wrote: Equity holders of SVB have been, and should be, wiped out.
SVB has 8500 employees (including my sister in law, who is a mid level manager in back office operations); the vast majority had nothing to do with the collapse or the decisions that led up to it. I'd imagine most of those employees hold SVB stock as part of their 401ks. "Should be" seems a little harsh, when you consider that retirement plans have just been wiped out.
RE: SVB - Mick - 03-12-2023
You have a mini-Enron situation developing here...nowhere near as bad, but hopefully the employees won't suffer. The institutional shareholders will suffer. They include:
Top 10 Owners of SVB Financial Group
Stockholder
Stake
Shares
owned
Total value ($)
Shares
bought / sold
Total
change
The Vanguard Group, Inc.
10.85%
6,413,197
1,847,706,188
+153,394
+2.45%
SSgA Funds Management, Inc.
5.22%
3,082,695
888,155,256
+4,918
+0.16%
BlackRock Fund Advisors
5.18%
3,063,085
882,505,419
+102,521
+3.46%
Alecta Pension Insurance Mutual
4.46%
2,633,100
758,622,441
+225,000
+9.34%
JPMorgan Investment Management, I... (BTW, I think JP Morgan ends up buying SVB...)
3.67%
2,171,478
625,624,527
+148,604
+7.35%
Artisan Partners LP
2.75%
1,624,103
467,920,315
+210,959
+14.93%
Geode Capital Management LLC
2.12%
1,251,764
360,645,726
+43,282
+3.58%
Harding Loevner LP
2.01%
1,186,039
341,709,696
+132,439
+12.57%
Franklin Mutual Advisers LLC
1.68%
991,990
285,802,239
+942,916
+1,921.42%
Capital Research & Management Co....
1.57%
925,165
266,549,288
-3
-0.00%
Top 10 Mutual Funds Holding SVB Financial Group
Mutual fundStake
Shares
owned
Total value ($)
Shares
bought / sold
Total
change
Vanguard Total Stock Market Index...
3.07%
1,812,145
522,097,096
+15,964
+0.89%
Vanguard Mid Cap Index Fund
2.33%
1,376,553
396,598,685
+2,196
+0.16%
Vanguard 500 Index Fund
2.32%
1,369,398
394,537,258
+3,228
+0.24%
JPMorgan Large Cap Growth Fund
1.94%
1,148,719
330,957,431
0
0.00%
Fidelity 500 Index Fund
1.09%
646,754
186,336,295
-856
-0.13%
SPDR S&P 500 ETF Trust
1.05%
618,393
178,165,207
-6,405
-1.03%
Government Pension Fund - Global ...
1.01%
599,323
172,670,950
+101,968
+20.50%
iShares Core S&P 500 ETF
0.89%
526,497
151,689,051
-1,050
-0.20%
American Funds Small Cap World Fu...
0.86%
510,500
147,080,155
-96,000
-15.83%
SPDR Series - Financial Select Se...
0.85%
504,181
145,259,588
-1,701
-0.34%
Looks like just between 1/5th and 1/6th of the employee retirement program (valued at $1.289 billion as of 12/2021) was in SVB common stock
Document
RE: SVB - BostonCard - 03-12-2023
“Should be” is not a moral judgment on the righteousness of equity-holders, it is just a statement of fact of what equity means. When Washington Mutual went under, its equity holder got nothing.
https://www.fdic.gov/resources/resolutions/bank-failures/failed-bank-list/wamu-settlement.html
Shareholders get to share in a company’s growth and profits when a company goes well, but also are exposed to losing their money if a company goes bankrupt.
My sympathies to your sister-in-law and all the other employees who are affected. Obviously it is a double whammy to potentially lose your job and some (maybe significant) savings. But, unless SVC’s assets are much larger than we think, what remains should be given, I’m order, to secured depositors, unsecured depositors, bond holders, and, lastly, equity holders. So, sadly, yes, the equity holders should be wiped out.
BC
RE: SVB - OutsiderFan - 03-12-2023
Ya, it's pretty evident SVB wasn't in a position that made it unable to operate or cover its obligations. Sure it lost some money on its MBS, but it was nowhere near being insolvent. What made it fail was like someone yelling "fire!" in a crowded theater after seeing smoke - that was actually just a cigarette someone was smoking - and causing everyone to stampede away in fear.
I get that if you've got a lot of money in a bank, you don't want to be the last one to claim yours and get nothing, but this mass panic is just stupid. I got an email from Intuit telling me I should find another bank due to SVB's collapse. I'm like, "who the F does Intuit think they are to be SPREADING panic like this!?!?!?" Aren't they aware SVB has enough cash and assets to cover depositors - especially if everyone stops pulling out of the bank - and that it's a tempest in a teapot for customers to some degree if a buyer is found that maintains operations?
I do feel for the employees. They didn't deserve to get wiped out because a handful of Silicon Valley's "elite" wet their pants at the slightest hint of adversity.
RE: SVB - TrumpCard - 03-12-2023
This article cites some anonymous sources in predicting that there won’t be a buyer for SVB as a whole entity, at least not before markets open on Monday.
https://www.reuters.com/business/finance/pnc-rbc-interest-svb-cools-regulators-seek-rescue-bids-sources-2023-03-12/
RE: SVB - TonyLima - 03-12-2023
(03-12-2023, 11:16 AM)cardcrimson Wrote: I don't understand why the Feds are racing to sell assets and having an extremely quick bid process to sell the bank. Fire sales rarely return the most for the stakeholders. And those with funds there, certainly didn't need them immediately. Maybe someone can explain the rush.
In every bank failure since time immemorial, the shareholders have been wiped out. The value of their shares is zero dollars.
(03-12-2023, 02:21 PM)TrumpCard Wrote: This article cites some anonymous sources in predicting that there won’t be a buyer for SVB as a whole entity, at least not before markets open on Monday.
https://www.reuters.com/business/finance/pnc-rbc-interest-svb-cools-regulators-seek-rescue-bids-sources-2023-03-12/
As of noon, Sunday, the FDIC was rumored to be talking to Goldman Sachs.
RE: SVB - dabigv13 - 03-12-2023
[Tweet]https://twitter.com/NickTimiraos/status/1635044036041121792?s=20[/tweet]
Another bank, Signature, being closed by the state. DOT says all depositors, at both banks, will be covered. DOT also moving to extend liquidity to other banks.
RE: SVB - TonyLima - 03-12-2023
Some data and definitions.
Bailout 1
Bailout 2
Data 1
Data 2
(03-12-2023, 03:27 PM)dabigv13 Wrote: [Tweet]https://twitter.com/NickTimiraos/status/1635044036041121792?s=20[/tweet]
Another bank, Signature, being closed by the state. DOT says all depositors, at both banks, will be covered. DOT also moving to extend liquidity to other banks.
Thank you.
RE: SVB - chrisk - 03-12-2023
Note that there will be a special assessment on remaining banks to cover any losses to the FDIC by covering uninsured deposits.
It seems clear that SVB was headed for trouble sooner or later and that it was the tech community that effectively pulled the plug on SVB sooner rather than later.
At some point, the CA Department of Financial Protection and Innovation would have eventually caught onto the misdeeds of SVB management. Dodds-Frank did not plug all of the holes in US financial regualtion.
RE: SVB - Mick - 03-12-2023
My guess is that they had to move to guarantee the depositors because they couldn't find a bank that would be willing to take on the broadly mismanaged mess that is Silicon Valley Bank.
I doubt their officers will do jail time. Stupidity isn't generally criminal.
RE: SVB - TrumpCard - 03-12-2023
(03-12-2023, 08:34 PM)Mick Wrote: My guess is that they had to move to guarantee the depositors because they couldn't find a bank that would be willing to take on the broadly mismanaged mess that is Silicon Valley Bank.
I doubt their officers will do jail time. Stupidity isn't generally criminal.
When the CEO sells $3.6 million in stock days before the bank fails, that could be a sign that something besides stupidity is at play.
https://www.wsj.com/livecoverage/stock-market-news-today-03-10-2023/card/silicon-valley-bank-ceo-sold-3-6-million-in-shares-days-before-fatal-loss-disclosed-6re8L8VDWjk956bOLaDD
RE: SVB - BostonCard - 03-12-2023
Per NPR, the FDIC will backstop all depositors.
BC
RE: SVB - TheWildJacko - 03-12-2023
(03-12-2023, 01:36 PM)cardcrimson Wrote:(03-12-2023, 01:20 PM)BostonCard Wrote: Equity holders of SVB have been, and should be, wiped out.
SVB has 8500 employees (including my sister in law, who is a mid level manager in back office operations); the vast majority had nothing to do with the collapse or the decisions that led up to it. I'd imagine most of those employees hold SVB stock as part of their 401ks. "Should be" seems a little harsh, when you consider that retirement plans have just been wiped out.
Agree 100%. My wife worked there, for the last 7 months, and her best friend for the last 8+ years. My wife didn’t work there long enough to have stock, but her friend was there for 8+ years and was heavily invested. There is no scenario in which she deserved to be wiped out for decisions that she had no part in.
RE: SVB - chrisk - 03-12-2023
(03-12-2023, 08:49 PM)TheWildJacko Wrote:(03-12-2023, 01:36 PM)cardcrimson Wrote:(03-12-2023, 01:20 PM)BostonCard Wrote: Equity holders of SVB have been, and should be, wiped out.
SVB has 8500 employees (including my sister in law, who is a mid level manager in back office operations); the vast majority had nothing to do with the collapse or the decisions that led up to it. I'd imagine most of those employees hold SVB stock as part of their 401ks. "Should be" seems a little harsh, when you consider that retirement plans have just been wiped out.
Agree 100%. My wife worked there, for the last 7 months, and her best friend for the last 8+ years. My wife didn’t work there long enough to have stock, but her friend was there for 8+ years and was heavily invested. There is no scenario in which she deserved to be wiped out for decisions that she had no part in.
The risk of keeping too much stock in your employer is why the SVB CEO sold over $3M of his stock the week before.
The rank and file need to follow his example. It was lucky the employees were paid their annual bonuses Friday.
I understand that employees will receive 150% of their salary for the next 45 days.
(03-12-2023, 08:34 PM)Mick Wrote: My guess is that they had to move to guarantee the depositors because they couldn't find a bank that would be willing to take on the broadly mismanaged mess that is Silicon Valley Bank.
I doubt their officers will do jail time. Stupidity isn't generally criminal.
Selling stock based on insider information could be.
RE: SVB - TheWildJacko - 03-12-2023
Respectfully, you don't know what you're taking about here. I'm not going to elaborate bc I don't know how much I can say, but the accusations you are making are based on inaccurate assumptions.
I can say, in brief, that rule 10b5-1 applies here, and that the stock sales were determined well in advance of this whole crisis. More info on rule 10b5-1:
https://www.investopedia.com/terms/r/rule-10b5-1.asp
RE: SVB - TonyLima - 03-12-2023
(03-12-2023, 09:55 PM)TheWildJacko Wrote: Respectfully, you don't know what you're taking about here. I'm not going to elaborate bc I don't know how much I can say, but the accusations you are making are based on inaccurate assumptions.
I can say, in brief, that rule 10b5-1 applies here, and that the stock sales were determined well in advance of this whole crisis. More info on rule 10b5-1:
https://www.investopedia.com/terms/r/rule-10b5-1.asp
With all due respect, the timing is too good to be true. Sale may have been arranged in advance — but how far in advance? Do you really believe the officers couldn’t see what was coming?
What do I know? I’m just a dumb economist.
RE: SVB - BostonCard - 03-12-2023
Without making an accusation in this specific case, I would note that the SEC has been cracking down on insider trading from pre-arranged trades
https://www.bloomberg.com/news/articles/2022-11-03/us-probes-insider-trading-in-prearranged-executive-stock-sales#xj4y7vzkg
If the insider has control on when good or bad news is released, and times the release to occur before or after a scheduled sale, it can be insider trading. In this particular case, the panic was spurred by Silicon Valley Bank’s announcement that it was going to try to raise $2.25 billion in an equity sale.
https://www.bloomberg.com/news/articles/2023-03-10/svb-abandons-equity-raise-imperiling-efforts-to-restore-calm#xj4y7vzkg
If the announcement of the attempted raise was made after the insiders sold their stock, and if the timing of that announcement (both big ifs) was influenced by the impending stock sale, this could still be an insider trading. The equity raise was announced March 8: https://ir.svb.com/news-and-research/news/news-details/2023/SVB-Financial-Group-Announces-Proposed-Offerings-of-Common-Stock-and-Mandatory-Convertible-Preferred-Stock/default.aspx. That was just over a week after the CEO’s stock sale (Feb. 27), so it all depends on when he knew that SVB needed to do an equity raise.
BC
RE: SVB - KartyFan - 03-12-2023
(03-12-2023, 10:29 PM)TonyLima Wrote:(03-12-2023, 09:55 PM)TheWildJacko Wrote: Respectfully, you don't know what you're taking about here. I'm not going to elaborate bc I don't know how much I can say, but the accusations you are making are based on inaccurate assumptions.
I can say, in brief, that rule 10b5-1 applies here, and that the stock sales were determined well in advance of this whole crisis. More info on rule 10b5-1:
https://www.investopedia.com/terms/r/rule-10b5-1.asp
With all due respect, the timing is too good to be true. Sale may have been arranged in advance — but how far in advance? Do you really believe the officers couldn’t see what was coming?
What do I know? I’m just a dumb economist.
As someone who has prepared many 10b5-1 plans, I have no idea if this is clean based on the information provided. We do know that the trades were put in place under rule 10b5-1, which requires the General Counsel to attest that the officer does not have material non-public information. It is of course possible that he did and lied, and the GC was unaware.
There are plenty of examples of these types of trades that look “too good to be true” that are legitimate. So I won’t be accusing him of securities fraud.
Additional relevant information would be the full trading plan (to see how many total shares he planned to sell), total holdings, his net worth, and sales history. Some of this can be looked up.
RE: SVB - TheWildJacko - 03-12-2023
I don't have details on that. At least 6 weeks according to this: https://www.kpvi.com/news/national_news/svb-ceo-sold-3-6-million-worth-of-shares-before-banks-collapse/article_71840dfb-4c08-5cf8-9d36-b4ddf3a040fc.html
My understanding is longer though.
RE: SVB - chrisk - 03-13-2023
If they can’t successfully prosecute under current rules, it will only hasten plans to tighten 10b51 rules, which have already been under close scrutiny for allowing too many too good to be true sales.
Of course, part of the problem is that bank regulations on banks this large should not have been loosened by Trump in 2018. It is also a black eye for KPMG.
In the pre-market Monday, First Republic is down 68% to less than 10% of its 2021 high.
HSBC UK has purchased SVB UK for 1 pound.