Greg Baker, the CEO of Silicon Valley Bank, sold $3.6 million of the company’s stock as part of a trading plan less than two weeks ago the firm disclosed extensive losses that led to its failure.
The sale of 12,451 shares on February 27 was the first time in more than a year that Baker sold shares in parent company SVB Financial Group, according to a regulatory filing. He filed the plan that allowed him to sell the shares on Jan. 26.
On Friday, the Silicon Valley bank failed after a week of uproar after the firm sent a letter to shareholders saying it would try to raise more than $2 billion in capital after posting losses. The announcement sent the company’s shares plummeting, even as Baker urged customers to remain calm.
Neither Becker nor SVB immediately responded to questions about the sale of his stock, and whether the CEO was aware of the bank’s plans to attempt to raise capital when he filed the trading plan. The sale was done through a revocable trust controlled by Baker, the filing shows.
pre planned plans
There is nothing illegal about the corporate trading schemes used by Baker. Schemes were established by the Securities and Exchange Commission in 2000 to thwart the possibility of insider trading. The idea is to avoid malfeasance by restricting sales to predetermined dates on which an executive may sell shares, and the timing may simply be coincidental.
However, critics point out that pre-arranged share-sale plans, called 10b5-1 plans, have significant drawbacks, including the absence of a mandatory cooling-off period.
Dan Taylor, a professor at the Wharton School at the University of Pennsylvania, said, “While Baker may not have anticipated the bank run on Jan. 26 when he adopted the plan, raising capital is critical.” In discussions to raise capital at the time of adoption of the plan, this is highly problematic.”
In December, the SEC finalized new rules that would mandate at least a 90-day cooling-off period for most executive trading plans, meaning they could trade on the new schedule for three months after holding. can not do.
Officials are required to start following those rules on April 1.
The text of this story is published from a wire agency feed without any modification.
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