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TuSimple co-founder Xiaodi Hou has refuted allegations from senior leadership that he was trying to poach staff for his new company. In a LinkedIn post, Hou said that he resigned from TuSimple’s board last week due to disagreements about CEO Cheng Lu’s compensation package, as well as the company’s shift from Level 4 autonomy to Level 2 autonomy.
“I believe that the so-called investigation was retaliation instigated by TuSimple’s Chairman and CEO in response to my disagreements over several decisions,” wrote Hou in a LinkedIn post.
Hou told TechCrunch that he has not begun another venture, implying that it is illogical to accuse him of poaching staff.
“I am regularly approached by current TuSimple employees who are disappointed with the current leadership and direction of the company,” wrote Hou in a statement. “They come to me because we were a family, and we still are. Over the past few months, many employees reached out to me for my advice about their careers and the changes at the company. Many asked about my own plans. In every engagement, I stayed true to my responsibilities and duties as a director.”
Hou went on to accuse TuSimple’s management of cornering, harassing and threatening certain employees in the course of their investigations.
Hou said his resignation was fueled in part by his rejection of current CEO Cheng Lu’s “lucrative” compensation package, which was awarded to the executive within days of layoffs that wiped 25% of the company’s workforce.
According to a filing, Lu gets an annual base salary of $450,000, a target annual bonus of around $400,000 and a monthly housing allowance of $9,000. If Lu is fired without cause, or if there’s a change in control of the company (like if the company is sold), Lu gets $15 million.
Lu’s compensation and severance package was agreed upon on December 14, 2022, according to filings. Lu, Hou and Chen were the only remaining board members at the time after they had previously fired everyone else. A source familiar with the matter asserted that Lu and Chen changed the company’s governance in a way that would allow them to circumvent Hou’s vote against Lu’s compensation package. The company’s new board members, Wendy Hayes and Michael Mosier, joined the board the next day. We’ve reached out to TuSimple for comment on the source’s claim.
Hou also said he was openly critical of TuSimple’s “decision to shift the focus from level 4 autonomous driving to level 2 assisted driving.”
Level 4 autonomy means the system can drive itself without requiring a human to takeover within a set of specific circumstances — like a geofenced area. Level 2, or advanced driver assistance systems (ADAS), can perform some automated tasks like lane assist, cruise control or emergency braking, but they require the human driver to maintain most of the control over the vehicle.
TuSimple has not publicly announced any intention to shift from Level 4 to Level 2, but doing so would completely change the company’s business model.
In December, TuSimple’s deal with Navistar to jointly develop and produce purpose-built autonomous semi trucks by 2024 fell through, leaving TuSimple without a clear direction for commercialization.
Lu denied to TechCrunch that TuSimple is planning to shift its focus away from L4. He said the company will soon announce its progress on its autonomous domain controller, which has the ability to support L2 solutions. Lu also pointed to TuSimple’s May 2022 analyst day presentation which outlined the company’s goal to produce L2+ ADAS in partnership with Nvidia. He reiterated that TuSimple is still very much focusing on L4.
TuSimple co-founder blames exit on CEO pay and autonomy downgrade by Rebecca Bellan originally published on TechCrunch
https://techcrunch.com/2023/03/14/tusimple-co-founder-blames-exit-on-ceo-pay-and-autonomy-downgrade/
Intellect CEO and founder Theodoric Chew told TechCrunch that the startup has been in touch with IHH Healthcare for a while because of its leadership position in its markets, and started exploring partnership opportunities over the last year. One goal is to offer a larger continuum of care from preventative to specialized care across the regions that the companies serve. Chew said IHH Healthcare and Intellect will focus on APAC first, but other regions, too.
So far, IHH Healthcare’s work with Intellect have included a pilot initiative with maternity patients at Gleneagles Hospital Singapore, and plans to offer the platform to corporate clients of IHH Singapore’s iXchange and IHH’s employees.
In a statement, IHH Healthcare group chief strategy and business development officer Ashok Pandit said, “Mental health issues affect one in every four persons. We are pleased to invest in Intellect, a market leader in this rapidly growing category, to boost their growth and enhance access to millions more people who require support, care or treatment.”
Intellect, the Singapore-based mental health platform that now serves over three million users in 20 countries, is getting ready for a new phase of growth after striking a strategic partnership with IHH Healthcare, Asia’s largest private healthcare group. IHH Healthcare will work with Intellect to develop and customize digital mental health programs for its patients, corporate clients and staff.
IHH Healthcare also made an investment into the startup, without disclosing the amount. IHH Healthcare is Intellect’s first strategic investor. Its other backers include Tiger Global, Y Combinator and Insignia Ventures.
Founded in 2019, Intellect’s markets now include Malaysia, Singapore, India and Hong Kong. Its platform offers telehealth coaching, services like therapy or psychiatry and mental health screening that can be done online or in-person at an Intellect clinic. It also has self-guided cognitive behavioral therapy-based programs. Intellect has a consumer app, but focuses primarily on enterprise customers who offer its platform to their employees as a wellness benefit.
IHH Healthcare’s Ashok Pandit with Intellect founder Theodoric Chew
Intellect CEO and founder Theodoric Chew told TechCrunch that the startup has been in touch with IHH Healthcare for a while because of its leadership position in its markets, and started exploring partnership opportunities over the last year. One goal is to offer a larger continuum of care from preventative to specialized care across the regions that the companies serve. Chew said IHH Healthcare and Intellect will focus on APAC first, but other regions, too.
So far, IHH Healthcare’s work with Intellect have included a pilot initiative with maternity patients at Gleneagles Hospital Singapore, and plans to offer the platform to corporate clients of IHH Singapore’s iXchange and IHH’s employees.
In a statement, IHH Healthcare group chief strategy and business development officer Ashok Pandit said, “Mental health issues affect one in every four persons. We are pleased to invest in Intellect, a market leader in this rapidly growing category, to boost their growth and enhance access to millions more people who require support, care or treatment.”
Mental health startup Intellect partners with Asia’s largest private healthcare group by Catherine Shu originally published on TechCrunch
When Masaya Aso worked on autonomous driving technology at Bosch in Japan and Germany, he realized that “many tasks were still manual as over 85% of warehouses have almost no automation at all.”
To help address the problem, Aso co-founded LexxPluss, a now two-year-old, Japan-based startup that designs and develop autonomous mobile robots to transport loads and optimize workflows within warehouses and logistic sites.
Aso, who is CEO of the outfit, co-founded it with robotics and autonomous vehicle veterans from Bosch, Amazon, Honda and more, and now the Japanese outfit is preparing to enter the U.S. with a fresh injection of about $10.7 million (1.45 billion JPY) of Series A funding that values the company at approximately $38.8 million (5.26 billion yen).
Drone Fund led the latest financing along with SOSV’s HAX, Incubate Fund, SBI investment and DBJ Capital.
LexxPlus initially targeted the logistics and automotive manufacturing spaces because those spaces are actively deploying robots beyond their production lines. Its main customers are in Japan in the logistics and automotive sectors; some of the current automotive components makers have facilities in the U.S., Aso said. It wants to use its existing clients’ relationships to enter the U.S. market, the largest autonomous mobile robots market, which was already $762 million in 2021 and is expected to grow to $3.2 billion by 2028, accounting for about 40% of the global market size.
In addition to the U.S. expansion, said Aso, the Series A money will help the company’s product development, increasing its payload to 500kg (a high-demand feature from e-commerce players), and adding a 3D visualization of a “digital twin” of operations for remote control and monitoring.
In terms of its competition, OTTO Motors, OMRON and Locus Robotics have also built autonomous mobile robots. Aso said LexxPluss’ differentiation centers on larger payloads (up to 500kg) and more open mechanical design intellectual property (IP) and application programming interfaces (APIs) that make maintenance and integration easier for customers. He adds that some of the company’s rivals tend to have closed IP, which is a pain point for their customers.
“Since we disclose lots of technical information, our partners can take a look into every detail of our technology,” Aso explained. “So they can understand how it works and how it can be deployed and used in their warehouse or factories. They can even [handle] maintenance by themselves. Our approach is to maximize product transparency and make collaboration much easier.”
The startup launched its sale strategy last year and now has seven clients and 32 partners, which are part of an open industrial robotic program that it launched last June. “The program is to accelerate collaboration with industrial robotics companies by disclosing most of our technical information, such as 3D CAD design, Electrical Design, embedded software, manufacturing process documents, deployment tools, maintenance documents, APIs, and so on,” Aso told TechCrunch.
The startup currently generates sales via a monthly subscription model or half upfront and half monthly subscription fee, Aso noted.
Naturally, the company’s investors think the company has a good shot at nabbing a meaningful slice of a big market. Recent research forecasts that the autonomous mobile robots market is projected to reach $8.70 billion by 2028, up from $1.97 billion in 2021.
“LexxPluss has a significant advantage over other warehouse automation companies as they leverage a large technical team in Japan, renowned for both industrial robotics (37% of the global market) and the automotive sector (35% of the U.S. automotive industry),” said Duncan Turner, general partner at SOSV and managing director of HAX.
“Their technical strength, combined with insight from decades of industry experience, will help them crack the U.S. market where seamless integration is key.”
LexxPluss expands into US with its warehouse robots by Kate Park originally published on TechCrunch
https://techcrunch.com/2023/03/14/lexxpluss-expands-into-us-with-its-warehouse-robots/
HealthPlix, an Indian startup offering its in-house platform for doctors to help record patient data digitally, has raised $22 million in fresh investment to broaden its reach in the country and allow more doctors to utilize its software to offer improved care to their patients.
In India, roughly 300,000 doctors practice medicine regularly. However, this figure appears minuscule compared to the country’s rapidly expanding population. This has resulted in doctors not finding enough time to adequately assess each patient. HealthPlix wants to solve this problem through its platform, which is available in a freemium model.
The Bengaluru-based startup lets doctors create a 360-degree medical profile of their patients that can be helpful during consultations and for treating chronic diseases. The platform also offers a collective intelligence to doctors that helps them understand characteristics such as what diseases are cropping up in what areas and what treatment regimens are being used by different patients and doctors.
“We help doctors diagnose diseases earlier than otherwise they would by being their true assistant,” said Sandeep Gudibanda, co-founder and chief executive of HealthPlix, in an interview with TechCrunch.
Founded in 2017, the startup has already empowered more than 10,000 doctors who treat 2.5% of the country’s entire population using the proprietary software. It aims to serve over 25,000 doctors by 2024 and reach 50,000 by 2025 to treat nearly 15% of the Indian population. Of the total number of doctors on board, 70% are outside metro cities, HealthPlix said.
Gudibanda said HealthPlix handles a volume of 110,000 patients per day and has facilitated over 70 million consultations to date. The platform reaches about 334 towns in 28 states across the country.
Although the market of electronic medical record (EMR) platforms in India has a number of players that all claim to help doctors treat their patients efficiently, HealthPlix believes that its doctor-first approach gives it an edge over the competition.
“Every time you make a decision, whether it’s a small feature, a revenue opportunity, whether you build a tech stack or any decision you’re making, are you putting doctors first?” asked Chaitanya Raju, executive director at HealthPlix.
The startup targets doctors who own clinics and look for new-age solutions to enhance efficiency. This helps them get a wider reach as the country’s healthcare primarily is undertaken in small clinics and nursing homes instead of at large-scale hospitals, where Indian patients typically visit when their symptoms and illness have gotten worse.
Alongside giving a digital solution for keeping patient history and consultations, HealthPlix uses AI to make it easier for doctors to write prescriptions and search for appropriate medicines and diagnoses. The AI deployment also speeds up identifying patients based on their medical data and helps define critical elements that may be relevant for the patient or help the doctor during the treatment.
HealthPlix lets doctors write a long prescription of, say, 100 characters with just eight clicks instead of writing those characters manually, said Raju. Additionally, the platform offers translation of prescriptions to let patients easily understand what their doctors have prescribed them.
Approximately 60% of the prescriptions processed by HealthPlix are originally written in English by doctors. However, once printed, the prescriptions are automatically translated into the patient’s local language, Gudibanda said.
All the data available on the software is fully encrypted, and the startup’s modeling is only on anonymized data, Raju said.
The Series C round, led by Avataar Venture Partners and SIG Venture Capital, is divided into $20 million raise against equity and $2 million in debt. It also saw participation from existing investors including Lightspeed Venture Partners, JSW Ventures, Kalaari Capital and Chiratae Ventures.
“We have seen many business models that have failed to scale in the health-tech ecosystem, and we believe that Sandeep has built a great team to deliver on HealthPlix promise,” said Mohan Kumar, investment advisor to Avataar Venture Partners, in a prepared statement.
HealthPlix looks to utilize 80% of its fresh funding to grow the doctor base and invest more in sales, product and engineering teams. Currently, the startup has a headcount of 392 people. It will also invest in clinical decision support to help doctors treat the patients better. Moreover, it plans to explore a couple of models to explore how it can disrupt the insurance and the payer side, Gudibanda said.
“We invested in HealthPlix to help further the team’s vision of being the active catalyst for technology adoption in healthcare by allowing doctors to be more productive, thereby driving better outcomes for patients,” said Bhavani Rana, investment advisor, SIG Venture Capital.
Gudibanda said the startup’s revenues grew 3.5x over the last year and are expected to rise 2.5x to 3x next year. So far, HealthPlix has raised about $36 million. The valuation after the latest funding was not disclosed.
India’s HealthPlix raises $22M to accelerate growth and enhance healthcare delivery by Jagmeet Singh originally published on TechCrunch
https://techcrunch.com/2023/03/14/healthplix-series-c-funding/
European startup Bolt is expanding to Nepal and launching its ride-hailing service in the country. The company’s previous market expansion was its launch in Thailand in 2020.
On Wednesday, Bolt announced the pilot of its on-demand ride-hailing service in Nepal’s capital, Kathmandu. The startup has kicked off the service with more than 400 local drivers.
Nepal, which has a per-capita national disposable income of $1,683, already has two foreign companies operating in the country’s ride-hailing market — Mountain View-headquartered InDrive and Bangladesh’s Pathao. However, Bolt announced that it won’t charge any commissions to its partners to attract existing ride-hailing drivers to its platform for at least the next six months. It also said that drivers would get 15% lower service fees than other competitors on the market.
Similar to the experience available to customers in Europe and Africa, Bolt will let riders in Nepal get safety features such as a dedicated SOS button and a “Share my ride” feature for real-time trip sharing. The Bolt app will also allow both riders and drivers to access in-app calls and messaging without disclosing their phone numbers.
Nepal’s ride-hailing market is limited to the country’s largest urban economy, the capital city, where there is strong demand from locals and tourists. Domestic startups, including Tootle and Sahara, are also catering to the market, alongside InDrive and Pathao. Nevertheless, Bolt does see a market opportunity as it is going forward with the launch of its service in the country.
“It’s far from our smallest market, far from our biggest market,” said Jevgeni Kabanov, president of Bolt, in an interview with TechCrunch. “We’re looking for basically the markets where we believe we can offer a better service.”
He added that the startup wanted to be the most affordable option for everyone living in Kathmandu.
Market experts and investors in the ride-hailing space in Asia believe getting money from Nepal is challenging. Kabanov said that Bolt used to localize its business to the actual specifics of the country and is prepared to do the necessary work — whether to comply with local regulations or work with local payment methods and taxation.
Bolt has not made any significant investments in Nepal at the moment, and is coordinating operations from its Estonian headquarters. Nonetheless, the startup may expand its business in the country after seeing some initial growth in adoption among drivers and riders. It also has grocery and food delivery as two other verticals that could eventually launch in Nepal as well.
“As we grow the ride-hailing vertical, we generally, in the medium to long term, are very likely to also launch the food delivery and grocery delivery,” Kabanov said.
Bolt’s launch in Nepal is opportunistic as the startup can count on an existing supply of drivers to start its ride-hailing business. It can also use this launch to better understand neighboring countries from the ground. However, the startup does not have plans to expand to larger markets, including India, anytime soon.
“We are definitely keeping an eye on all the major markets, doing research and trying to understand what’s the competitive situation, what’s the opportunity to improve on the service offering,” Kabanov said while asked about the plans to launch in India.
Founded in August 2013, Bolt (formerly called mTakso and Taxify) has around 100 million customers in 45 countries and 500 cities across Europe and Africa. The startup raised more than €1 billion from investors, including Sequoia, World Bank’s IFC and European Investment Bank. It is currently valued at €7.6 billion.
Europe’s Bolt expands to Nepal with ride-hailing service by Jagmeet Singh originally published on TechCrunch
Tesla is opening up Powerwall home battery sales, nearly two years after limiting them because its supply was “too low.”
Tesla announced its backup battery tech long ago, in 2015, explicitly intending for the product to work in tandem with solar panels. Yet up until 2021, the automaker also allowed folks to buy the big batteries separately. Eventually, Elon Musk clarified that supply issues were to blame for the restrictions, but the executive teased in 2022 that “ordering a Powerwall by itself should be possible” by the end of the year.
Some months apparently behind schedule, this is now happening — with caveats.
Tesla said this week that it is now selling Powerwalls separately “in select US markets.” The company hasn’t put out an official list of these markets, as far as we can tell, but its website offers a way for prospective shoppers to see if their address has been whitelisted.
For example: I typed in my Los Angeles address, and Tesla’s site responded: “We’re assessing where to service next. Reserve your Powerwall to help us expand into your area.” However, the device does seem to be available separately in other areas, such as Austin, Texas.
Tesla’s focus on Texas is no coincidence. The company relocated to Austin in 2021. A year later, Tesla launched its invite-only electric plan in parts of Texas where retail choice is available, including Houston and Dallas. As we wrote in December, the plan is called Tesla Electric and it’s exclusively available to Powerwall havers. Tesla recently told investors that it intends to expand its electric plan to other markets, but the company was vague about it, like always. With that in mind, it’s plausible that Tesla is doing this as part of its plan to grow Tesla Electric.
You might be wondering, “Why would someone want a Powerwall sans solar? The stand-alone device could be appealing to folks who aren’t in an ideal spot for sun, or for those who don’t want to pay for solar and a home battery all at once. As we observed at CES 2023, lots of companies seem to believe that demand for backup batteries and generators is on the rise — and surely extreme weather events linked to climate change could be driving interest.
Tesla has a home battery to sell you, with or without solar by Harri Weber originally published on TechCrunch
https://techcrunch.com/2023/03/14/tesla-has-a-home-battery-to-sell-you-with-or-without-solar/
Social media platform Reddit is experiencing an outage that is affecting its website and app, according to the company’s status page and to whoever has tried to load the platform. Reddit has been down since at least 12:18 p.m. PDT.
The company has identified an internal systems issue and a fix “which may take some time to implement,” the company said. The fix was identified around 2:43 p.m. PDT.
A Reddit spokesperson wouldn’t share more information with TechCrunch about what caused the outage or how long it’ll take to fix.
There have been over 60,000 reports of issues with the platform on Downdetector, and many TechCrunch reporters have confirmed problems loading Reddit.
On the web page, no content loads and a pop-up says, “Sorry, we couldn’t load posts for this page.” On the iOS app, content that was downloaded several hours ago still populates, but no comments will load.
Reddit has been down for hours by Rebecca Bellan originally published on TechCrunch
https://techcrunch.com/2023/03/14/reddit-has-been-down-for-hours/
California’s Civil Rights Department (CRD) must provide Tesla with details of the investigation it conducted prior to filing a lawsuit against the company for racial discrimination, a judge has ruled.
The CRD first sued Tesla in February last year after receiving several allegations that Tesla’s Fremont factory was a racially segregated workplace where Black workers were subject to mistreatment, unequal pay, harassment and a hostile work environment.
Tesla has tried, and failed, to have the case dismissed, arguing that the CRD didn’t follow proper protocol in its investigations into the automaker’s Fremont factory. In a blog post following the lawsuit, Tesla denied wrongdoing and called the lawsuit “misguided,” saying the agency didn’t provide Tesla with specific allegations or factual bases for its lawsuit.
The tentative ruling passed Monday by California Superior Court Judge Evelio Grillo will provide Tesla with the details it has sought, and could give the automaker a chance to narrow the scope of the lawsuit.
California law requires the CRD to investigate discrimination claims by workers before suing employers. If the agency is found to have not probed certain claims before filing suit, Tesla can ask to have those claims removed from the case or even try again at having the case dismissed.
What comes to light when the CRD shares the details of its investigations could have an effect on Tesla’s countersuit against the CRD, which was filed in September. In that lawsuit, Tesla alleges that the agency didn’t first notify the automaker of claims of racial discrimination at its factory or give the company a chance to settle outside of court — difficult to do with a company that has repeatedly denied wrongdoing. Tesla hopes to use that lawsuit to get the CRD barred from following what Tesla says are unlawful procedures in the investigation of an employer. The CRD has a demurrer pending for that suit with a hearing date of April 11.
The CRD can still contest Grillo’s decision at a hearing on Tuesday, because it is a tentative ruling, but it’s unlikely the judge will make a change.
Neither the CRD nor Tesla could be reached for comment.
This is one of several lawsuits pending in California courts that accuse Tesla of allowing discrimination and sexual harassment at its factories. Last June, a Black former worker at the Fremont factory rejected a $15 million payout from the automaker, which had been slashed by a judge from the original $137 million jury verdict. The worker, Owen Diaz, has opted for a new trial on damages, which is set to begin March 27.
California agency must provide Tesla with details of racial bias investigation by Rebecca Bellan originally published on TechCrunch
Silicon Valley Bank was more than just a preferred choice for managing payroll and investor cash: It also offered wealth management services and below-market-rate home loans and helped coordinate private stock sales.
So where does this bank’s collapse leave the tech industry? Who’s most vulnerable, who stands to benefit, and what are some of the long-term implications for VC? To learn more, Karan Bhasin and Ram Iyer interviewed:
“We’re probably going to see consolidation in the VC class,” said Gavet.
“It was already on the way, but this is probably going to accelerate it, because SVB was also a preeminent provider of loans for GPs to make their capital commitment polls.”
To get a roundup of TechCrunch’s biggest and most important stories delivered to your inbox every day at 3 p.m. PDT, subscribe here.
Imagine being a tech reporter coming back after a few lovely days at Disney World with the family, only to discover that the entire startup ecosystem is in turmoil after a major bank collapsed. Anyway, what we’re saying is welcome back, Christine! We’ve missed you!
Apropos SVB — the bank’s clients received a surprising email in their inboxes late Monday evening, Natasha M reports. It was from the bank’s new CEO Tim Mayopoulos stating that the institution was not only open, it was also business as usual. Who had that on their bingo cards?
Let’s jump right into the Tuesday Crunch. — Christine and Haje
Caught in the wake of the shock collapse of erstwhile rival Silicon Valley Bank, shares of First Republic fell 62% yesterday. Well, that stock appears to rebounding a little today, as investors appear to have a little more confidence that we’ve staved off the banking apocalypse, Alex reports.
Flat6Labs is among the most active VCs in Africa, having invested in over 100 startups to date, across the Middle East and North Africa (MENA) region. Annie reports that after 11 years, the Egypt-based seed-stage accelerator is setting out on a foray through a new $95 million fund to back startups in East and West Africa.
And we have five more for you:
Image Credits: Dimitri Otis (opens in a new window) / Getty Images
Silicon Valley Bank was more than just a preferred choice for managing payroll and investor cash: It also offered wealth management services and below-market-rate home loans and helped coordinate private stock sales.
So where does this bank’s collapse leave the tech industry? Who’s most vulnerable, who stands to benefit, and what are some of the long-term implications for VC? To learn more, Karan Bhasin and Ram Iyer interviewed:
“We’re probably going to see consolidation in the VC class,” said Gavet.
“It was already on the way, but this is probably going to accelerate it, because SVB was also a preeminent provider of loans for GPs to make their capital commitment polls.”
Three more from the TC+ team:
TechCrunch+ is our membership program that helps founders and startup teams get ahead of the pack. You can sign up here. Use code “DC” for a 15% discount on an annual subscription!
If you’re dying to buy Apple’s new “banana phone” but want to know if the shade is more “sunshine” or “dandelion,” the consumer products giant is offering a live concierge that can answer that and any other question you have. Sarah reports that this new way to shop online for an iPhone includes a live shopping feature with your very own specialist for that high-touch customer experience without waiting in line for hours.
Now to bring you all things Google:
Here’s five more that have nothing to do with Google:
Daily Crunch: Meta’s ‘year of efficiency’ continues as CEO announces plans to dismiss 10,000 more workers by Christine Hall originally published on TechCrunch
The Justice Department and SEC are investigating the stock sales that officers of Silicon Valley Bank made days before the bank failed, according to both the WSJ and the NYT. The probes are reportedly in their preliminary phase. Both outlets note that it’s common to investigate prearranged stock selling plans when the sales take place shortly before releasing news that could have an adverse impact on a company’s share price.
The agencies’ apparent focus for now are on securities filings that show the bank’s CEO of 12 years, Greg Becker, and its CFO, Daniel Beck, who joined the outfit nearly six years ago from Bank of the West, sold shares two weeks ago ahead of the bank’s abrupt collapse.
Becker exercised options on 12,451 shares on February 27 and sold them the same day, netting roughly $3 million. Beck sold roughly one-third of his holdings in the company, $575,000 worth of shares, on the same day.
The sales were conducted via 10b5-1 plans, which allow insiders of publicly traded corporations to set up a trading plan for selling stocks they own by establishing a predetermined number of shares to be sold at a predetermined time. The laws around such plans, established by the SEC in 2000, are intended to keep insiders from unfairly profiting from important corporate information that was not yet public.
While the probes may not lead to allegations of insider trading, one possible problem for both Becker and Beck ties to the proposed capital raise that SVB announced last Wednesday — the same release that set investors on edge, leading many to begin moving their money out of the bank.
As Dan Taylor, a Wharton professor who studies corporate trading disclosures, told Bloomberg last week: “While Becker may not have anticipated the bank run on January 26 when he adopted the plan, the capital raise is material . . .If they were in discussion for a capital raise at the time [their stock-sale plans] was adopted, that is highly problematic.”
Becker also made at least one appearance between the time that plans for his stock sale were put in place and the bank’s implosion.
According to the WSJ, at a conference early last week, he talked optimistically about the bank’s business, reportedly telling attendees: “You can look at agtech, you can look at fintech, you can look at clean tech, you can look at medtech, personalized medicine . . .You literally go across the entire stack. There’s exciting things in every single category.”
The WSJ reports that Beck spoke at a different conference in February where he said the bank was not at risk of being too concentrated around smaller tech outfits.
Either way, it’s worth noting that the stock sales were not extraordinary by the recent standards of executive behavior inside of SVB, even if outsiders — and even non-executive employees of the bank — might find it shocking.
According to Smart Insider, a U.K.-based outfit that analyzes share transactions made by directors and senior employees in their own company, Becker cashed out roughly nearly $30 million worth of shares altogether over the last two years.
SVB executives and directors — including Becker’s stock sales — cashed out $84 million worth of stock over the same period, according to Smart Insider data first cited by CNBC.
Beck and Becker were both dismissed from their roles on Friday.
The FDIC sought out a buyer for the business over the weekend without success, though the outfit’s U.K. business was sold separately to the the U.K. subsidiary of HSBC Holdings on Monday morning for £1. (HSBC disclosed plans today to inject £2 billion of liquidity into the division.)
The FDIC is now reportedly planning another auction, per the WSJ.
In the interim, it has installed CEO Tim Mayopoulos, a former CEO of Fannie Mae, who said on a Zoom call today with some of the bank’s constituents that he hopes to keep much of the bank’s existing management together.
In December, the SEC adopted amendments to Rule 10b5-1 under the Securities Exchange Act of 1934 and new disclosure requirements to enhance investor protections against insider trading, including restricting the use of multiple, overlapping trading plans. The final rules “aim to strengthen investor protections concerning insider trading and to help shareholders understand when and how insiders are trading in securities for which they may at times have material nonpublic information,” per a press release by the agency.
Regulators are taking a harder look at those insider stock sales by SVB execs by Connie Loizos originally published on TechCrunch
