NEW YORK: Massachusetts regulators have opened an investigation into sales of company stock by top executives at First Republic Bank (FRC.N) in the weeks leading up to the recent banking turmoil.

Massachusetts’ Secretary of the Commonwealth William Galvin told Reuters his office has subpoenaed First Republic. He is seeking details about the firm’s insider trading policies and how officers handled their stock sales from January 1.

A spokesperson for First Republic declined to confirm the firm received a subpoena or comment on the stock sales.

A series of U.S. bank failures have roiled the global banking sector over the last month. Silvergate Capital Corp wound down operations on March 8. Silicon Valley Bank and Signature Bank were seized by regulators days later amid liquidity crises, actions that sapped investor confidence in the sector.

Galvin said his office has opened a similar probe into insider sales by executives at SVB Financial Group, which owned Silicon Valley Bank until its failure. The Wall Street Journal previously reported that investigation.

Both banks have branches in Massachusetts.

A spokesperson for Simpson Thacher & Bartlett LLP, counsel to Silicon Valley Bridge Bank, declined to comment.

First Republic’s share price has plummeted nearly 90% in March in the wake of the collapse of SVB which saw people pull deposits from smaller banks. First Republic lured high net-worth customers with preferential rates on mortgages and loans. This strategy also made it more vulnerable than regional lenders with less-affluent customers, since U.S. deposit insurance only guarantees $250,000 per savings account.

California regulators took possession of Silicon Valley Bank on March 10.

“Both entities - their banking strategies were risky. That’s a fair statement. The risk has come home to roost,” said Galvin.

He said his office was particularly interested in examining insiders’ trading activity leading up to the turmoil.

Galvin has a reputation for aggressive enforcement as a securities regulator. In the past, his office has sought to revoke Robinhood Markets Inc’s (HOOD.O) brokerage license and fined a MassMutual subsidiary over the “Roaring Kitty” case.

The Massachusetts probe into First Republic is in the early stages and may not result in regulatory action.

Corporate insiders are allowed to buy and sell shares of their companies. It is illegal for officers and directors to transact on material information that is not yet public.

SHARE SALES

Several First Republic executives have sold shares this year, including founder and Executive Chairman James Herbert. Herbert sold $4.5 million worth of shares so far this year, according to Federal Deposit Insurance Corporation filings published on First Republic’s website.

Due to a regulatory anomaly, executives at banks that do not have holding companies file transaction forms with the banking regulator instead of the Securities and Exchange Commission.

Among the other First Republic executives who sold shares this year was Chief Executive Officer Michael Roffler, who sold nearly $1 million of his shares in January.

Herbert and Roffler did not respond to requests for comment on their stock sales or the subpoena.

Probes such as Galvin’s highlight the mounting scrutiny of bank executives and their risk management amid the recent banking crisis. Banking regulators, federal prosecutors and the SEC all probing SVB’s collapse.

Galvin said he is not yet concerned about other banks operating in his state, though he knows they remain under intense pressure.

“We have no reason to believe they’ve invested in similar strategies,” Galvin said.