The U.S. Federal Reserve and the Securities and Exchange Commission (SEC) have commenced an investigation into investment bank Goldman Sachs’ (NYSE:GS) role in two transactions with Silicon Valley Bank (SVB) weeks before the Californian bank’s sudden collapse, the Wall Street Journal reported.
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Goldman Under Investigation
The Fed and the SEC are seeking documents pertaining to Goldman’s role in buying $21 billion of SVB’s available-for-sale securities portfolio. At the same time, they are investigating the bank’s role in advising SVB on a failed capital raise that eventually led to its meltdown. Mainly, they are looking into any improper communication between Goldman’s investment banking unit and its trading division about the portfolio sale.
Additionally, the U.S. Department of Justice (DOJ) has subpoenaed Goldman as part of its investigation into the SVB collapse. The Wall Street Journal had previously reported that the SEC and DOJ are investigating the regional bank’s collapse. The latest inquiries are reportedly a part of the broader investigation.
In an SEC filing last month, Goldman disclosed that it is “cooperating with and providing information” to several governmental agencies in connection with their investigations and inquiries into SVB, including the bank’s transactions with the beleaguered regional bank in or around March 2023.
A Goldman spokeswoman said that prior to the portfolio sale, the bank informed SVB that it would not act as the latter’s adviser on this transaction and that SVB must not seek any advice from Goldman in this regard. The bank asked SVB to hire a third-party financial adviser for the portfolio sale.
Is Goldman Sachs a Buy or Sell?
Goldman Sachs earns a Strong Buy consensus rating based on 11 Buys and two Hold ratings from 13 top Wall Street Analysts. The average price target of $406.92 implies nearly 20% upside. On Thursday, Citigroup analyst Keith Horowitz reiterated a Buy rating on Goldman with a price target of $400.
