The U.S. Securities and Exchange Commission has opened an investigation into Archegos Capital’s Bill Hwang and the margin call trades that led to a $20 billion liquidation of his family office, according to a report from Bloomberg.
The investigation is “routine” following such a high-profile market event, and the probe may not lead to allegations of wrongdoing. Archegos Capital was hit with several margin calls last week that it was unable to meet, prompting several banks that had prime brokerage relationships with the family to liquidate its stock positions in names like ViacomCBS, Baid, and Tencent Music Entertainment, among others. The trades led to extreme volatility in a handful of stocks on Friday, with ViacomCBS and Discovery notching their biggest daily declines on record.
Banks like Goldman Sachs and Wells Fargo managed to escape potential losses by quickly liquidating their exposure to Archegos, but others, like Nomura and Credit Suisse, are facing billions in potential losses from the trades, and of course, there’s all kinds of ordinary people’s money that is tied up in all of this as well.
Bill Black
— source theanalysis.news | Apr 5, 2021
