Bank Insiders Buying, the Cost of Bailouts… and More
Is This a Crime As Well?
Garrett Baldwin
A week before SVB Financial (SIVB) collapsed, some interesting news emerged from the embattled Silicon Valley bank.
Two of its top executives sold a significant amount of company stock. Its CFO sold more than $575,000 in stock on February 27. And there was about the $3.6 million sold by its CEO on February 27.
So, Rep. Ro Khanna (D-CA) is calling for SVB Financial’s CEO Gregory W. Becker to return the money and the gains he made from his stock sale on February 27.
But here’s the thing: The executive didn’t actually announce his intention to sell the stock on February 27.
A rule under the SEC called 10b-5-1 was designed in 2000 to prevent insider trading. It effectively allows executives to defend themselves against these accusations by creating a pre-arranged schedule to sell stock.
So, Becker actually entered this plan on January 26.
Now, here’s where Khanna has to ask questions… Did Becker enter this schedule in good faith? How far back was the company talking to regulators about the bank’s stability?
Did Becker know that the company would need to engage in a $2.25 billion capital raise just 45 days after his filing? That capital raise ultimately failed, and there was a massive run on the bank.
We’ll see once an investigation is complete.
But here’s the real story...
Over the last week, bank executives have used this crisis’s significant weakness to load up on their company stocks. Read on here...
Why "C" Students Outperform "A" Students in the Marketplace
Celeste Lindman
One of my favorite accounting professors had a great business sense I’ll never forget. On the first day of class, he said something like…
“Note to college professors: Be nice to your “A” students. One day, you will teach alongside them. Be nice to your “C” students. One day, you will teach in the buildings they buy.”
I still think about that today, especially as accountants like myself and other professionals struggle with getting buried in details. Read on here…
Watch Out for the Tech Sector, Plus My ‘Hit List’ for Next Week
In 2008, to stave off the worst effects of the Great Financial Crises, the Federal Reserve doubled the supply of dollars from $800 billion to over $1.6 trillion.
To keep the lights on over the next decade, that supply doubled again in spurts to $3.2 trillion. COVID-19 stimulus took us to over $6 trillion.
And now that bank runs have put global financial contagion back on deck, we can expect another order of magnitude leap in dollar supply.
It’s worth pointing out the obvious and elegant irony of all this – today’s panic is a direct result of the Fed’s fleeting attempt to undo past bailouts.
But what I hope is finally getting seared into everyone’s brain pan, is the pattern…
Each successive crisis or government imperative doubles the cost of bailing out the economy. And each bailout creates more dependence and fragility. It allows unavoidable risks to fester and grow.
* From 11/28/22 to 03/04/23 on closed trade signals, the average win rate is 84.62%, and the average return per position (winners and losers) is 5.25% and a 28.86% average winner with an average hold time of 3 days on the options.
ROUNDTABLE WITH DON YOCHAM: Liquidity Fighting the Fed
Don Yocham
In this week’s banking crisis-oriented “Roundtable”, Garrett Baldwin, Jeff Zananiri and I discussed:
Are we back to QE forever?
Will the Fed exercise its put?
What to consider as we await the most important FOMC meeting ever next week.
Join us and our special guest, Jack Carter, Monday morning when we’ll discuss what we see coming for the market in the week ahead – and have a few laughs along the way! Grab a coffee and be here at 9am ET: https://special.wealthpress.com/crush
ABOUT US: We believe that the opportunity for financial literacy and freedom belongs to all people, not just those who already have years of investing experience. The Trading Pub provides an array of educational services and products that will help you navigate the markets and become a better investor. Trading is made simple through our online forum full of trading techniques to give you the best tools to kick-start your investing journey. We offer collaborative webinars and training; we love to teach. No matter the opportunity, we bring together a strong community of like-minded traders to focus on analyzing market news as it’s presented each day. DISCLAIMER: FOR INFORMATION PURPOSES ONLY. The materials presented from The Trading Pub are for your informational purposes only. Neither The Trading Pub nor its employees offer investment, legal or tax advice of any kind, and the analysis displayed with various tools does not constitute investment, legal or tax advice and should not be interpreted as such. Using the data and analysis contained in the materials for reasons other than the informational purposes intended is at the user’s own risk. DISCLAIMER:TRADE AT YOUR OWN RISK; TRADING INVOLVES RISK OF LOSS; SEEK PROFESSIONAL ADVICE. The Trading Pub is not responsible for any losses that may occur from transactions effected based upon information or analysis contained in the presented. To the extent that you make use of the concepts with the presentation material, you are solely responsible for the applicable trading or investment decision. Trading activity, including options transactions, can involve the risk of loss, so use caution when entering any option transaction. You trade at your own risk, and it is recommended you consult with a financial advisor for investment, legal or tax advice relating to options transactions. Please visit thetradingpub.com/terms for our full Terms and Conditions.
