March 14 (Reuters) – U.S. prosecutors are investigating the collapse of Silicon Valley Bank, according to a source familiar with the matter, as scrutiny mounts over the firm’s sudden collapse and regulators scramble to contain the fallout.

The U.S. Justice Department is probing the sudden demise of the bank, which was shuttered on Friday following a bank run, the source said, declining to be named as the inquiry is not public. The Securities and Exchange Commission has launched a parallel investigation, according to the Wall Street Journal, which first reported the probes.

Spokespeople for the SEC, SVB and the Justice Department declined to comment.

The investigation is in early stages and may not result in allegations of wrongdoing or charges being filed, the source said. Officials are also examining stock sales by officers of SVB Financial Group (SIVB.O), which owned the bank, the WSJ reported, citing people familiar with the matter.

SEC Chair Gary Gensler on Sunday said in a statement the agency is particularly focused on monitoring for market stability and identifying and prosecuting any form of misconduct that might threaten investors during periods of volatility.

The rapid demise of Silicon Valley Bank and the fall of Signature Bank have left regulators racing to contain risks to the rest of the sector. On Tuesday, ratings agency Moody’s cut its outlook on the U.S. banking system to “negative” from “stable.”

SVB Financial Group and two top executives were sued this week by shareholders, who accused them of concealing how rising interest rates would leave its Silicon Valley Bank unit susceptible to a bank run.

Reporting by Chris Prentice in New York and Mehnaz Yasmin in Bengaluru; Editing by Krishna Chandra Eluri, Saumyadeb Chakrabarty and Nick Zieminski

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