DOJ Prosecutors Investigating First Republic Bank Employees Over Insider Trading

The Department of Justice is reportedly investigating stock trading actions by several First Republic Bank (OTC: FRCB) employees during the recent collapse of the bank. 

First Republic Bank was dissolved on May 1 by the California Department of Financial Protection and Innovation, and the FDIC was appointed as receiver, which subsequently arranged for the transfer of the bank's assets to JPMorgan Chase & Co. (NYSE: JPM). 

JPMorgan acquired the bank's $173 billion in loans, $30 billion in securities, and $92 billion in deposits. 

Federal regulators received criticism for choosing JPMorgan, which is already the largest bank in the nation, and for the additional cost to the U.S.'s primary deposit insurance fund.

Also Read: Buying JPMorgan? Here's How Much You Need To Own To Yield $500 Per Month

The DOJ's investigation, which is still in its early stages, will look at whether anybody at the bank utilized inside knowledge for trading reasons, as well as review the company's financial reports.

Representatives from the Justice Department and JPMorgan have declined to comment.

The Justice Department's fraud section has also been examining the collapses of Silicon Valley Bank and Signature Bank, as well as Silvergate Capital's relationship with Sam Bankman-Fried's bankrupt FTX exchange and Alameda Research, although no misconduct has been uncovered so far. 

Earlier this month, the SEC also opened an investigation into First Republic's management for insider trading before the government seizure. 

SPDR S&P Regional Banking ETF (ARCA: KRE), an exchange-traded fund tracking U.S. regional bank stocks, fell 1.7% on Wednesday, after briefly hitting a key technical hurdle a day earlier. 

Now Read: Stocks Sell Off On FOMC Minutes: Traders Anticipate June Fed Pause, July's Hike Uncertain