The investigation is focused on whether the employees traded on non-public information about the bank’s financial health, the report said. The U.S. Attorney’s Office for the Southern District of New York is leading the investigation, according to the report.
First Republic Bank’s stock has plummeted more than 10% since the news broke. The bank has been struggling with a surge in loan defaults due to the coronavirus pandemic. It has also been hit by a series of lawsuits from investors who allege the bank misled them about its financial health.
The bank has said it is cooperating with the investigation and that it has “robust policies and procedures in place to ensure compliance with all applicable laws and regulations.” It has also said it is committed to “maintaining the highest standards of ethical conduct.”
The investigation is a reminder of the importance of compliance with insider trading laws. Companies must ensure that their employees are not trading on non-public information, as this could lead to serious legal and financial consequences.