Media learned about the sale of $100 million worth of bank shares from Signature insiders
WSJ: Signature Bank insiders sold $100 million worth of the bank's stock after it surged due to cryptocurrency capital raising
Most of the sales of securities by management went unnoticed by investors because the bank did not disclose this information to the SEC, as most companies of this size do
Insiders at the closed Signature Bank sold more than $100 million worth of the bank's stock after it refocused on the digital asset sector, leading to an influx of capital from the new industry and an increase in its value, The Wall Street Journal (WSJ) reported.
Journalists found that about half of that amount was raised by former bank chairman Scott Shea, former CEO Joseph Depaolo, and former COO Eric Howell over the past three years.
Signature was one of the few banks that provided services to cryptocurrency companies. Capital inflows from the crypto industry led to a 68 percent increase in deposits at the bank in 2021 and a 140 percent increase in the bank's stock price, according to the article. According to reporters, insiders received $70 million from stock sales during the same year.
In March 2022, Depaolo and Howell sold another $9.2 million worth of stock. Previously, from 2004 to 2019, Depaolo sold stock almost annually, earning about $39 million during that time. Howell received about $23 million from the sale of bank securities during the same period.
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According to reporters, the extent of sales by Signature executives is difficult to determine, in part because the bank filed with the Federal Deposit Insurance Corporation (FDIC) rather than the SEC, as companies of this size typically do.
Investors keep a close eye on the regulators' websites, which publish data on sales of securities by company executives. Most banks of this size file information with the SEC. Signature was one of only two companies in the S&P 500 Index that did not file executive sales with the SEC. The other was First Republic Bank.
Bids to the FDIC are generally not counted by investors and the services that track insider trades, experts told the publication. In addition, the corporation's website, where the filings are posted, only allows them to be viewed one at a time.
Also, the bank probably didn't process some of its filings correctly for the FDIC. As a result, they were not showing up on sites that track insider sales to inform investors.
Regulators announced the closure of Signature Bank on March 12. The decision was made due to "systemic risks" following the collapse of Silicon Valley Bank (SVB). The decision to put Signature into receivership came as a surprise to the bank's managers.
With regard to SVB bank, referring to the extracts of the SEC documents, Blockworks reporters also estimated that the top managers of the bank earned on the sale of their shares more than $100 million, selling them at a time of record growth of bitcoin and other cryptocurrencies in 2021.
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