I said above that, as a moral hazard matter, SVB’s executives are out of their jobs and their shares are zeroed, which is a good warning to other risk-loving bank executives. But several of them sold stock just before the failure, so they are not really zeroed, and you can see how that would rub people the wrong way. My own impression is that this is unlikely to be insider trading: SVB’s balance-sheet problems were disclosed and known weeks ago, and I gather that SVB’s executives were as surprised as anyone else by the run last week. But, still, it doesn’t look great.
‘Enforcement 40’ for 2020
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