Did Silicon Valley Bank hoodwink everyone before its collapse?

In what comes as thelargest US bank failure since the 2008 financial crisis, Santa Clara-headquartered Silicon Valley Bank (SVB) collapsed on Friday. The expedited nature of its collapse has raised serious concernswith many accusing the company of hoodwinking the depositors, despite knowing that its inevitable fall was around.

Days before SVB collapsed, the bank posted a self-congratulatory tweet where Forbes magazine had named it in the list of 'America's Best Banks' while also adding it to the Financial All-Stars list.

"Proud to be on @Forbes' annual ranking of America's Best Banks for the 5th straight year and to have also been named to the publication's inaugural Financial All-Stars list," read the tweet which is still up.

The tweet by SVB can be clubbed in the same league as the tweets that aged like milk,with the infamous tweet by World Health Organization citingCOVID-19 did not spread through human contact taking the top spot.

Five days after SVB posted the boastful tweet, the regulators came down charging and seized control of its assets after it failed to meet the withdrawal demands of the investors.

SVB executives sell their shares

US media has reported that prior to the collapse, senior executives at SVB sold a significant portion of their shares.

CEO Gregory Becker sold 11 per cent of his shares last month while Daniel Beck, CFO, Michelle Draper, CMO and Michael Zucker, general counsel sold as much as 32 per cent, 25 per cent and 19 per cent shares respectively.

SVB paid bonuses to US employees

Additionally, hours before going bust, SVB paid out annual bonuses to its US employees, according to multiple news sources. The payments were made for the work done in 2022.

Though the size of payouts could not be confirmed, a CNBC report estimated the bonus to be in the$12,000-$140,000 range for associates and managing directors respectively.

Hiring'financial crimes' senior manager

Another report states that the bank posted a job listing for Senior Manager, Financial Crimes on Friday, just before it was shut down.

"This position within Client [Bank Secrecy Act] Risk assesses Prospective client [Bank Secrecy Act]/[Anti-Money Laundering] risks pre-onboarding to approve or decline the Prospect as well as review Clients who may pivot during their relationship and require approval throughout the client’s relationship," read the job description.

VC firms pulling out their funds

A day before the fall, billionaire Peter Thiel's Founders Fund — a venture capital firm had withdrawn nearly all of its money from the bank, smelling the coffee.

Following the withdrawals, the fundno longer had any exposure to SVB. According to reports, the company had run into problems using SVB's services. Apart from Founders Fund,Coatue Management, and Union Square Ventures were the other VC firms that managed to avoid exposure to the bank.

However, the ordinary customers were not so lucky. Images and videos have gone viral on social media platforms which show anxious customers lining up outside the bank branches in long queues, waiting to withdraw their precious savings.

The videos captured drew eerie similarities to the Great Depression of the 1930s when people had to line up similarly to receive their own money.

Though Federal Deposit Insurance Corporation, or FDIC has assured it has access to $175 billion of the bank's customer deposits and that depositors will get hands over their insured amounts — there is still palpable anxiety.

The fact that big VC companies which have no dearth of money managed to save their funds while the ordinary public suffered, seems to suggestthat something was fishy.

(With inputs from agencies)

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