Baidu was added to the list of affected stocks. On March 30, Mitsubishi UFJ Financial (MUFG) securities arm declared a $300 million loss in its EMEA operations linked to Archegos. The fate of Archegos has been compared to the meltdown caused by Long Term Capital Management. Other banks, such as Deutsche Bank, were able to close their substantial positions quickly and avoid any losses. could be highly significant and material to our first quarter results." According to The Wall Street Journal, Goldman Sachs and Morgan Stanley were able to limit their losses relating to Archegos by acting more quickly than Credit Suisse and Nomura Holdings. A press release from Credit Suisse said that "the loss resulting from this exit. On March 29, the share price of Credit Suisse was down by 14%, while Nomura Holdings shares declined by 16%. This sale was reported to be the cause of a 27% plunge in share price of ViacomCBS and a similar fall in the price of Discovery, Inc. The stocks were reportedly tied to the total return swaps held by Archegos. On March 26, 2021, banks offering prime brokerage services to Archegos started to liquidate billions of dollars' worth of various stocks after it had failed to meet a margin call. The fund was also heavily leveraged and did business with multiple banks which were likely unaware of Archegos' large positions held by other banks. This meant that Archegos did not need to disclose its large holdings, while if it had transacted in regular stocks it would have had to. In 2014, Hwang "was banned from trading in Hong Kong for four years." Īrchegos' holdings were primarily in the form of total return swaps, a financial instrument where the underlying securities (stocks) are held by banks. Tiger Asia Management has previously pleaded guilty to insider trading of Chinese bank stocks in 2012 and paid a $44 million fine. įormerly of Tiger Asia Management, Hwang created the Archegos family office in 2013, which had $10 billion under management as of 2020. Its derivative contracts "exposed the firm to severe losses when the trades went bad." The Wall Street Journal reported that Hwang lost $8 billion in 10 days, while Bloomberg News reported that Hwang lost $20 billion in 2 days. The firm had large, concentrated positions in ViacomCBS, Baidu, Vipshop, Farfetch, and other companies, and the firm's use of total return swaps had helped to hide its high exposure from lending banks. On March 26, 2021, Archegos defaulted on margin calls from several global investment banks, including Credit Suisse and Nomura Holdings, as well as Goldman Sachs and Morgan Stanley. On ApHwang was indicted and arrested on federal charges of fraud and racketeering. Archegos Capital Management was a family office that managed the personal assets of Bill Hwang.
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