The top securities regulator in Massachusetts has opened an investigation of potential insider trading at First Republic Bank, one of the regional banks that has faltered during recent severe stress.
Massachusetts Secretary of the Commonwealth William Galvin is probing sales of First Republic stock by the bank's executives prior to the liquidity crisis that brought down Silicon Valley Bank and Signature Bank earlier this month. Galvin has issued a subpoena, said his spokesperson, Debra O’Malley.
Galvin’s actions were first reported by Reuters. The news service said Galvin is seeking details about First Republic’s insider trading policies and stock transactions by the bank’s officers since Jan. 1. O’Malley confirmed the substance of the Reuters report but did not offer any further details.
A spokesperson for First Republic declined to comment.
Galvin also is investigating insider sales at SVB Financial Group, the firm that owned SVB until it was taken over by California regulators this month, according to Reuters. Both First Republic, a San Francisco bank, and SVB, which is located in Santa Clara, California, have branches in Massachusetts.
First Republic, a private bank and wealth management firm, has been squeezed over the last several weeks, following the collapse of SVB. Its stock price has plummeted about 90% over the last month. It's also losing financial advisors from its wealth management group.
Several financial firms — including Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs and Morgan Stanley — transferred $30 billion in uninsured deposits to First Republic on March 16 to stabilize its balance sheet.
Galvin is trying to determine whether First Republic executives unloaded their stocks in anticipation of the problems that have hit the regional banking sector. First Republic Executive Chairman James Herbert has sold $4.5 million worth of shares this year, Reuters reported, citing Federal Deposit Insurance Corp. filings on First Republic’s website.
First Republic and SVB both attracted deposits from high-net-worth individuals by using what Galvin told Reuters were risky strategies. He added: "The risk has come home to roost.”
Galvin is among the most aggressive state regulators in the nation. One of his most high-profile enforcement actions in recent years was against the online brokerage Robinhood.
It’s not clear whether his investigation of First Republic will result in regulatory action.
[Also read: Is First Republic bank in trouble? First Republic’s cloudy future puts wealth management on notice]
Mara Glassel and Julie Fox will co-lead the fast-growing hybrid RIA’s ultra-high-net-worth and private wealth businesses.
The banking giant's wealth arm extends its revenue streak as it pushes to exit consent orders weighing on growth since 2020.
New Allspring research finds 401(k) participants want guidance on income and rollovers, not just portfolio automation.
Aging homeowners hold record housing wealth - but most advisors still aren't bringing it into retirement plans
$1.7M invested from an inheritance. Then the phone went dead.
Knighthead Life entered the market with a competitive MYGA. A strong launch earned advisor confidence and paved the way for FIAs.
As AI makes financial information more accessible than ever, Lana Hock explains why human judgment, trust, and empathy remain the qualities clients value most in a financial advisor
