Benzinga - U.S. government agencies are examining Goldman Sachs Group Inc.'s (NYSE: GS) participation in Silicon Valley Bank's efforts to raise money in March.
What Happened: In early March, the New York-based financial institution purchased a $24-billion portfolio of distressed debt from Silicon Valley Bank, which had suffered a $1.8-billion loss.
Goldman expected to profit by reselling the portfolio at a higher price later.
The Wall Street titan is cooperating and providing information to the government in connection with the investigations and inquiries into Silicon Valley bank, including the role the firm played with the now-failed bank in March, according to a regulatory filing, Bloomberg reported Thursday.
Goldman said it was cooperating with and giving information to "various governmental bodies" in connection with examinations and inquiries concerning SVB.
The Context: Drew Pascarella, a senior lecturer of finance at Cornell University, indicated in a March New York Times story that Goldman presumably obtained a substantial discount on that purchase.
SVB requested Goldman Sachs' assistance in financing more than $2.2 billion to offset its shortfall; Goldman failed to close the sale, and a bank run that soon followed effectively ruined SVB.
After the SVB collapse, a group of Democratic U.S. lawmakers wrote to Security Exchange Commission regulators and the Justice Department, demanding an investigation into Goldman Sachs' participation in the second-largest bank failure in U..S history.
Market Reaction: Goldman Sachs' stock price fell 1.7% to $323 per share on Thursday, putting it on track for its fourth straight session of losses.
The banking sector as a whole is experiencing significant losses for the session. The broad Financial Select Sector SPDR Fund (ARCA: XLF) declined 2%, pushing the month-to-date performance to a negative 6%.
Goldman's rivals like JP Morgan Chase & Co. (NYSE: JPM) and Bank of America (NYSE: BAC) were down 2.9% and 3.4%, respectively. Wells Fargo & Co. (NYSE: WFC) and Citigroup (NYSE: C) were even lower, by 5% and 3.7%, respectively.
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