5 ms·

The banks are still gone though, once they get taken over, their equity zeroes out. All owners of the bank will end up with nothing, I think that's a good enou

The banks are still gone though, once they get taken over, their equity zeroes out. All owners of the bank will end up with nothing, I think that's a good enough deterrence against bad things.

scottLobster 4y ago
Honestly I'd like for there to be a decent look-back period to recover the funds from any stock sold ahead of time, as appears to have happened in this instance. Use the proceeds to help make depositors whole. No proof at the moment, but from what I've read several of the executives conveniently sold a lot of their stock more or less at the same time right before this kicked off. Guarantee at least some of that was some insider golden-parachuting.
- noah_buddy 4y ago
  I would guess that these executives entered their sales months in advance as is relatively typical to avoid insider trading. You can look this up on the SEC website
  - scottLobster 4y ago
    And in the case of company failure, perhaps the lookback period should be extended beyond several months. I don't have nearly the financial or legal knowledge to suggest viable policy, but from what we know of how SVB failed it would have likely been visible well in advance of the failure to someone with access to the requisite information. Edit: Also, the CEO sold stock not even two weeks in advance https://www.bloomberg.com/news/articles/2023-03-10/svb-chief-sold-3-6-million-in-stock-days-before-bank-s-failure#xj4y7vzkg https://www.bloomberg.com/news/articles/2023-03-10/svb-chief...
    - arcticbull 4y ago
      I don't know why people keep calling out the CEO stock sales, unless we find out something new this was almost guaranteed to have been done pursuant to a publicly filed 10b5-1 plan which has a 30 or 90 day cooling off period and must be filed when they have no material non-public information. So if the CEO could see this coming, anyone else could have too on the basis of the same information. These things can come at you fast. They probably put in the trade instructions sometime last year and they are not permitted to make modifications to the 10b5-1 when they do come into material non-public information as that is itself insider trading. Trading (or changing a 10b5-1 plan) while in possession of material non-public information, whether in your favor or not, is insider trading.
      - zerocrates 4y ago
        It was definitely a 10b5-1 plan, but apparently done pretty recently as such things go, only back to January.
      - yeahsure22 4y ago
        I don’t know if your are just ignorant or if your are intentionally misleading people but this system is widely abused. A stock sale can be schedule in your plan at the end of every month and you can elect to cancel a planned sale at any time. The CEO used exactly this type of sham plan to unload his shares. Look at the plan he filed this year and the plan he filed every year for the last three years.
        arcticbull 4y ago
        > A stock sale can be schedule in your plan at the end of every month and you can elect to cancel a planned sale at any time. Canceling a 10b5-1 is not in and of itself a violation, correct, but it can kill your affirmative defense as it jeopardizes the good faith element. However, they would have had to have entered into the 10b5-1 prior to them coming into material nonpublic information in the first place for it to have been valid at all. My point is they made the decision to sell before they knew what was happening and filed a compliant trading plan. Sounds fair, but lucky.
- Animats 4y ago
  They'll probably get hit by the standard 90-day clawback in bankruptcy.
- op00to 4y ago
  What about stocks sold as part of a 10b5-1 plan?
devmunchies 4y ago
Except in this case the CEO sold a few million in stock weeks ago.
- Aperocky 4y ago
  Insider trading laws should cover that, I expect jail.
  - TedDoesntTalk 4y ago
    Unfortunately, he scheduled the trade in January or so. At least that’s what I read. Who knows the truth.
BigCatStuff 4y ago
Do you really think the owners and senior management of SVB ended up with nothing? What about the stock sales they made right before the FDIC took over, or the bonuses given out, or even their compensation during the years in which this high-risk interest rate scheme was going on? They have orders of magnitude more money than most people, and will get away with no liability.
- Aperocky 4y ago
  > What about the stock sales they made right before the FDIC took over Is there a more clear cut case of insider trading? SEC should already been working on that now. Anyhow, you're arguing that they SHOULD end up with nothing, that is an entirely different subject of its own. Because you're talking about punishment, while I'm talking about deterrence. Punishment must be enacted from outside after the fact, while deterrence can be innate before it happens. These senior management could have years of cushy job and more equity, and now they have to rely on savings and have the SEC up their ass. It's clear which is more preferable.
  - yunwal 4y ago
    > Is there a more clear cut case of insider trading? Genuine question, is there any evidence that these trades were out of the norm, rather than a regular portfolio rebalancing that’s common with any employee who receives part of their comp in RSUs?
  - pca006132 4y ago
    Just wondering, if they know for sure that they will be sued afterwards, why would they sale their stocks? Why not do nothing and live with what they already have? Is there a possibility that they can get away with it?
    - x0x0 4y ago
      Likely a 10b5 plan. I suspect (hope) the circumstances will be very carefully scrutinized.
matheusmoreira 4y ago
> I think that's a good enough deterrence against bad things. Nah. They should liquidate the owner's private property as well to cover uninsured depositor losses. Better than making them whole by printing money and having everyone else pay for it indirectly through inflation.
- concordDance 4y ago
  A few minutes thought should reveal multiple issues with this idea.
machina_ex_deus 4y ago
They got to play with 10x leverage with their client funds for free. You can't barely get 2x leverage at broker, you pay interest rates much higher and they actually enforce strict margins. Minewhile these people out of their privilege as bankers got to play with much bigger leverage, while paying zero interest rates to their counterparty which turned out to be fully paid for by the government in the end. 100% investment loss in this case is hardly enough, with the leverage levels banks can access they can literally collect pennies in front of a train and have positive expectation values for shareholders, while investing in negative expectation value investments. And they did collect pennies in front of a train. Bought 10yr treasuries at historical lows. They paid their customers nothing for it. VC investment strategy for VC bank. They took the zero or hero attitude until the end. Again, we're taking about people with already VC mentality of "worst case 100% loss, best case 1000%". No wonder that once VCs recognized their own shadow they fled so fast. And now they are pretending as if it's the fate of the banking system on the line. VC bank, managed like VC venture for VC firms. They deserve to lose VC money. Their loans are probably also worthless than they claim, but they managed to successfully swindle the Fed in the most VC way ever with the shortest deadline. I'm betting FDIC is going to pay twice as much as expected in the end.
- Aperocky 4y ago
  > And they did collect pennies in front of a train. Bought 10yr treasuries at historical lows. > worst case 100% loss, best case 1000% See I don't understand how you can have 1000% return by buying treasuries, at any time. It was a stupid decision in hind sight, but the best case is order of magnitudes below 1000% return. And you've put these two things right next to each other, what am I missing?
  - citizen_friend 4y ago
    > 1000% return by buying treasuries by buying with leverage? What percentage returns do you think would maintain their business?
    - Aperocky 4y ago

The banks are still gone though, once they get taken over, their equity zeroes out. All owners of the bank will end up with nothing, I think that's a good enough deterrence against bad things.

scottLobster 4y ago

Honestly I'd like for there to be a decent look-back period to recover the funds from any stock sold ahead of time, as appears to have happened in this instance. Use the proceeds to help make depositors whole. No proof at the moment, but from what I've read several of the executives conveniently sold a lot of their stock more or less at the same time right before this kicked off. Guarantee at least some of that was some insider golden-parachuting.

noah_buddy 4y ago
I would guess that these executives entered their sales months in advance as is relatively typical to avoid insider trading. You can look this up on the SEC website
- scottLobster 4y ago
  And in the case of company failure, perhaps the lookback period should be extended beyond several months. I don't have nearly the financial or legal knowledge to suggest viable policy, but from what we know of how SVB failed it would have likely been visible well in advance of the failure to someone with access to the requisite information. Edit: Also, the CEO sold stock not even two weeks in advance https://www.bloomberg.com/news/articles/2023-03-10/svb-chief-sold-3-6-million-in-stock-days-before-bank-s-failure#xj4y7vzkg https://www.bloomberg.com/news/articles/2023-03-10/svb-chief...
  - arcticbull 4y ago
    I don't know why people keep calling out the CEO stock sales, unless we find out something new this was almost guaranteed to have been done pursuant to a publicly filed 10b5-1 plan which has a 30 or 90 day cooling off period and must be filed when they have no material non-public information. So if the CEO could see this coming, anyone else could have too on the basis of the same information. These things can come at you fast. They probably put in the trade instructions sometime last year and they are not permitted to make modifications to the 10b5-1 when they do come into material non-public information as that is itself insider trading. Trading (or changing a 10b5-1 plan) while in possession of material non-public information, whether in your favor or not, is insider trading.
    - zerocrates 4y ago
      It was definitely a 10b5-1 plan, but apparently done pretty recently as such things go, only back to January.
    - yeahsure22 4y ago
      I don’t know if your are just ignorant or if your are intentionally misleading people but this system is widely abused. A stock sale can be schedule in your plan at the end of every month and you can elect to cancel a planned sale at any time. The CEO used exactly this type of sham plan to unload his shares. Look at the plan he filed this year and the plan he filed every year for the last three years.
      - arcticbull 4y ago
        > A stock sale can be schedule in your plan at the end of every month and you can elect to cancel a planned sale at any time. Canceling a 10b5-1 is not in and of itself a violation, correct, but it can kill your affirmative defense as it jeopardizes the good faith element. However, they would have had to have entered into the 10b5-1 prior to them coming into material nonpublic information in the first place for it to have been valid at all. My point is they made the decision to sell before they knew what was happening and filed a compliant trading plan. Sounds fair, but lucky.
Animats 4y ago
They'll probably get hit by the standard 90-day clawback in bankruptcy.
op00to 4y ago
What about stocks sold as part of a 10b5-1 plan?

devmunchies 4y ago

Except in this case the CEO sold a few million in stock weeks ago.

Aperocky 4y ago
Insider trading laws should cover that, I expect jail.
- TedDoesntTalk 4y ago
  Unfortunately, he scheduled the trade in January or so. At least that’s what I read. Who knows the truth.

BigCatStuff 4y ago

Do you really think the owners and senior management of SVB ended up with nothing? What about the stock sales they made right before the FDIC took over, or the bonuses given out, or even their compensation during the years in which this high-risk interest rate scheme was going on? They have orders of magnitude more money than most people, and will get away with no liability.

Aperocky 4y ago
> What about the stock sales they made right before the FDIC took over Is there a more clear cut case of insider trading? SEC should already been working on that now. Anyhow, you're arguing that they SHOULD end up with nothing, that is an entirely different subject of its own. Because you're talking about punishment, while I'm talking about deterrence. Punishment must be enacted from outside after the fact, while deterrence can be innate before it happens. These senior management could have years of cushy job and more equity, and now they have to rely on savings and have the SEC up their ass. It's clear which is more preferable.
- yunwal 4y ago
  > Is there a more clear cut case of insider trading? Genuine question, is there any evidence that these trades were out of the norm, rather than a regular portfolio rebalancing that’s common with any employee who receives part of their comp in RSUs?
- pca006132 4y ago
  Just wondering, if they know for sure that they will be sued afterwards, why would they sale their stocks? Why not do nothing and live with what they already have? Is there a possibility that they can get away with it?
  - x0x0 4y ago
    Likely a 10b5 plan. I suspect (hope) the circumstances will be very carefully scrutinized.

matheusmoreira 4y ago

> I think that's a good enough deterrence against bad things. Nah. They should liquidate the owner's private property as well to cover uninsured depositor losses. Better than making them whole by printing money and having everyone else pay for it indirectly through inflation.

concordDance 4y ago
A few minutes thought should reveal multiple issues with this idea.

machina_ex_deus 4y ago

They got to play with 10x leverage with their client funds for free. You can't barely get 2x leverage at broker, you pay interest rates much higher and they actually enforce strict margins. Minewhile these people out of their privilege as bankers got to play with much bigger leverage, while paying zero interest rates to their counterparty which turned out to be fully paid for by the government in the end. 100% investment loss in this case is hardly enough, with the leverage levels banks can access they can literally collect pennies in front of a train and have positive expectation values for shareholders, while investing in negative expectation value investments. And they did collect pennies in front of a train. Bought 10yr treasuries at historical lows. They paid their customers nothing for it. VC investment strategy for VC bank. They took the zero or hero attitude until the end. Again, we're taking about people with already VC mentality of "worst case 100% loss, best case 1000%". No wonder that once VCs recognized their own shadow they fled so fast. And now they are pretending as if it's the fate of the banking system on the line. VC bank, managed like VC venture for VC firms. They deserve to lose VC money. Their loans are probably also worthless than they claim, but they managed to successfully swindle the Fed in the most VC way ever with the shortest deadline. I'm betting FDIC is going to pay twice as much as expected in the end.

Aperocky 4y ago
> And they did collect pennies in front of a train. Bought 10yr treasuries at historical lows. > worst case 100% loss, best case 1000% See I don't understand how you can have 1000% return by buying treasuries, at any time. It was a stupid decision in hind sight, but the best case is order of magnitudes below 1000% return. And you've put these two things right next to each other, what am I missing?
- citizen_friend 4y ago
  > 1000% return by buying treasuries by buying with leverage? What percentage returns do you think would maintain their business?
  - Aperocky 4y ago