Top executives at embattled lender First Republic Bank reaped a combined haul of nearly $12 million by dumping stock just before chaos unfolded in the banking sector – including sales that occurred as recently as this month.
The stock sales are drawing scrutiny as the nation’s largest banks threw a whopping $30 billion lifeline to prevent First Republic’s collapse following a mass exodus of depositors this week.
As of Friday, the bank’s stock has plunged nearly 80% since February.
In total, company executives have earned about $11.8 million in sales this year and sold stock at prices averaging just under $130 each. The stock is currently trading for less than $23 per share.
The windfall included sales by First Republic’s Executive Chairman James Herbert II, who raked in $4.5 million from stock sales since the start of the year, the Wall Street Journal reported on Thursday, citing government documents.
Herbert’s sales occurred in two tranches in January and February and were respectively worth 7% and 5% of his total stake in the bank, the filings showed.
Robert Thornton, First Republic’s president of private wealth management, sold 73% of his stake in the bank on Jan. 18 and earned $3.5 million on the transaction, according the report.
CEO Mark Roffler sold shares worth nearly $1 million in January — after previously dumping $1.3 million worth of stock last November.
David Lichtman, First Republic’s chief credit officer, reportedly earned $2.5 million in three stock sales that all occurred this year.
His most recent sale took place on March 6, just two days before Silicon Valley Bank disclosed it had taken a $1.8 billion loss on a fire sale of its bond holdings due to rising interest rates. That disclosure led to SVB’s failure and resulting trouble for regional banks.
Lichtman and his wife had previously sold $2.5 million in shares in transactions that took place late last year, according to filings.
A bank spokesman told the Journal that First Republic and its executives declined to comment on the sales.
A spokesman for Herbert said the stock sales “were consistent with his annual estate planning and philanthropy, with more than a fifth of the proceeds donated to charity,” according to the Journal.
The Post has reached out to First Republic for comment.
Unlike most publicly traded firms, First Republic is not required to report its executives’ stock sales to SEC regulators. The bank is one of a handful that are exempt due to a quirk linked to the Securities Act of 1933, which exempted some institutions.
Instead, First Republic submits the reports to the Federal Deposit Insurance Corp., which later publishes them in an online database. The bank also publishes the disclosures on its website.
First Republic has so far averted the type of federal intervention that took place at SVB and Signature Bank of New York – which were placed into receiverships and had all of their deposits guaranteed by the FDIC.
Earlier this week, a report said the SEC and Justice Department are already probing the circumstances that led to SVB’s downfall – as well as recent stock sales by its top executives.
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