Recent reports indicate that Signature Bank insiders disposed of over $100 million in shares in the three years preceding the Bank’s fall.
Insiders sold $100 million in stock
Signature Bank stock plunged dramatically a few weeks ago in what has been termed the third-largest bank failure in U.S. history. As more are asked, and examinations are done, sleuths have allegedly discovered a couple of transactions cashing out the bank’s stock.
According to a report from Wall Street Journal (WSJ), prominent company insiders cashed out over $100 million worth of Signature’s stock in the three years preceding the demise of the bank.
The executives mentioned in the WSJ report include the Bank’s Chairman, Scott Shay, the former CEO Joseph Depaolo, and the COO, Erick Howell.
The reports indicate that in 2021 alone, the bank’s insiders sold about $70 million worth of shares. This was at a time when crypto was in good shape. In 2020, the insiders sold over $30 million worth of stock. Further reports indicate that out of the $100 million sold, the chairman sold about $50 million.
The reports also indicate that while the transactions were made long ago, they were never known to the public. This is because of the way they were reported in the documents.
Signature Bank was put under receivership on March 12 after “a crisis of confidence in the management team.”
“Ignored” crypto-associated risks
Signature is among the banks that streamlined deposit processes for major crypto platforms between 2020 and 2021. The three insiders sold a lot of their stock in 2022, which grew by 140%, following the crypto bull market the same year.
However, many recently criticized the bank’s leadership for ignoring crypto risks.
The insiders in question were part of a board committee tasked with oversight for the crypto-focused bank‘s risk. In a senate hearing, senate committee members asked why the risk profile committee sat by while the bank’s exposure to risky assets grew unchecked.
More reports allege that the trio was leading Signature’s interest in crypto. Scott Shay, the chairman, has in the past called himself a crypto enthusiast. Joseph Depaolo and Erick Howell also advocated for doing business with crypto.