SEC filing shows Becker’s share sales were part of a scheduled program dubbed 10b5-1 plan, however, the securities regulator is considering a 90-day “cooling down” period between the filing and the first sale.
Last week, the announcement of shutdown by Silicon Valley Bank (SVB) sent tremors across the banking space forcing top US regulators like The Fed and FDIC to intervene. Although the Fed has managed to contain the contagion from spreading further, fresh details of insider stock sales have raised new questions.
SVB Shutdown
Data shows that Silicon Valley Bank CEO Greg Becker sold $30 million of stock over the last two years. Interestingly, just two days before the bank declared a large loss, Becker had sold $3.6 million worth of SIVB stocks on February 27. Soon after the results, the SIVB stock plummeted and collapsed within a week’s time.
As per data from Smart Insider, Becker has been offloading his stock over the last two years. He sold the SIVB shares at different price points from $287 a share to $598 a share netting a total of $29.5 million. Furthermore, Becker also purchased options at lower exercise prices, and maintained his equity ownership stake.
But Becker is not the only executive at Silicon Valley Bank (SVB) to offload the shares. The names of other executives who sold millions of dollars worth of shares since 2021 include Chief Marketing Officer Michelle Draper, Chief Financial Officer Daniel Beck and Chief Operating Officer Philip Cox.
All these executives together cashed out $84 million worth of stock collectively over the last two years. This news has sparked major criticism of SVB’s management raising doubts about insider stock sales before the major decline. Rep. Ro Khanna — a Democrat from California has lashed out at Becker stating that he should return the money to depositors. In his tweet on Monday, Khanna added:
“I have said that there should be a clawback of that money. Whatever his motives, and we should find out, that $3.6 million should go to depositors.”
Here’s What SEC Filings State
As per the SEC filings on January 26, Becker’s share sales were part of a scheduled program dubbed 10b5-1 plan. As per this plan, insiders can schedule stock sales ahead of time to alleviate concerns over trading on insider information.
However, SEC Chair Gary Gensler recently expressed concerns stating that insiders have been selling right after filing the plans. This creates overlapping or multiple plans by creating one-off scheduled sales.
As result, the SEC is considering more rules for disclosures, transparency and timelines for scheduled sales. It plans to impose a 90-day “cooling off period” between the filing and the first sale thereafter. Under these rules, Becker’s sales which came just one month after the filing, wouldn’t be allowed.
Last month, the SEC sent a strong message to inside sellers by charging Terren Peizer, executive chairman of Ontrak, who offloaded over $20 million of the company’s stock before it plunged by 44%.
Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
