An investigation is underway into stock trading by some employees of First Republic Bank during the bank’s recent collapse, reports Financial Advisor IQ.
The report said the Department of Justice is trying to determine whether staff members used inside information in the process of selling their stock shares.
Last month, regulators took possession of California-based First Republic after its clients withdrew over $100 billion in deposits and the bank was then sold to JPMorgan Chase, marking the third failure of an American bank since March.
The Department of Justice probe of stock sales was said to be in its early stages and so far prosecutors have not made any accusations of wrongdoing. It was not yet clear which employees were the focus of the investigation. Financial disclosures by First Republic are also being scrutinized according to the report, which originated with Bloomberg.
There was no comment on the investigation by DOJ and JPMorgan representatives.
The Securities and Exchange Commission is also reportedly investigating whether there was any improper insider trading by First Republic Bank executives before the sale to JPMorgan.
As part of the sale, JPMorgan gained $92 billion in customer deposits and absorbed $173 billion in outstanding First Republic loans. The company paid a total of $10.6 billion to the Federal Deposit Insurance Corporation to take over First Republic’s deposits and assets.
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