Gary Gensler is now head of the SEC. What comes next?
TYLER DURDEN, 19 April 2021
Apparently, firing half a dozen executives including its head of risk management (Lara Warner, also one of the most high-ranking women in the global financial services industry) hasn’t done enough to quiet shareholders’ demands for change atop Credit Suisse, the Swiss banking giant that reported a $4.7 billion loss from the collapse of Archegos Capital Management, with billions of losses likely to follow from the collapse for Greensill.
As CEO Thomas Gottstein clings to his position, the Wall Street Journal reported Monday that John Dabbs and Ryan Nelson will immediately step down as co-heads of prime services, the prime-brokerage unit responsible for extending all that credit to Archegos (as a reminder, for an explainer on how Archegos built its $100 billion massively leveraged position. Continue reading “Article: Credit Suisse Prime Brokerage Heads Fired Over Archegos Blowup”
Archegos Exposes SEC Blind Spots, Dithering on Market Oversight
Robert Schmidt and Benjamin Bainx, 10 April 2021
The U.S. Securities and Exchange Commission was supposed to be able to spot a whale like Bill Hwang by now. As the financial world knows, it didn’t. Will the agency be able to catch the next one?
The collapse of Hwang’s Archegos Capital Management represents one of the most spectacular failures of risk-management and oversight in recent memory. For the SEC, it caps a decade of foot-dragging on protections that were meant to avert, or at least minimize, just such a blowup. Continue reading “Article: Archegos Exposes SEC Blind Spots, Dithering on Market Oversight”
Senate Banking Chair Probes Banks Over Archegos Collapse
Dean Seal, 08 April 2021
The chairman of the Senate Banking Committee is asking Credit Suisse, Goldman Sachs and other Wall Street giants that brokered for Bill Hwang’s Archegos Capital Management to explain their involvement in the fund’s high-profile collapse.
In letters released Thursday, Sen. Sherrod Brown, D-Ohio, told higher-ups at the Swiss bank, Goldman, Morgan Stanley and Nomura that he was “troubled, but not surprised” that risky derivatives transactions between the banks and Hwang’s generally unregulated family office were connected to a shocking multibillion-dollar firesale on stocks in late March. Continue reading “Article: Senate Banking Chair Probes Banks Over Archegos Collapse”
“A Gigantic Clusterf**k”: How Morgan Stanley Avoided $10BN In Archegos Losses By Selling First
TYLER DURDEN, 07 April 2021
One week ago, in our initial take on the biggest hedge fund collapse since LTCM, we explained that – in our view – the catalyst for the failure of the Archegos hedge fund, which had as much as 10x leverage allowing it to hold some $100BN in positions, was Morgan Stanley and Goldman breaking ranks with their fellow prime brokers, and sparking the biggest margin call since Lehman and AIG.
Turns out we were right. Continue reading “Article: “A Gigantic Clusterf**k”: How Morgan Stanley Avoided $10BN In Archegos Losses By Selling First”
In Archegos fire sale, Credit Suisse, Nomura burned by slow exit
Matt Scuffham, Elizabeth Dilts Marshall, Brenna Hughes Neghaiwi, 31 March 2021
NEW YORK/ZURICH (Reuters) -While banks including Goldman Sachs, Morgan Stanley and Deutsche Bank were able to exit their trades with Archegos Capital relatively unscathed, Credit Suisse and Nomura have been burned in the fire sale.
The blowup of the Archegos fund, a family office run by former Tiger Asia manager Bill Hwang, is still reverberating across the financial system, with global banks so far standing to lose more than $6 billion.
Switzerland’s Credit Suisse and Japan’s Nomura are expected to bear the brunt of that. Continue reading “Article: In Archegos fire sale, Credit Suisse, Nomura burned by slow exit”
SEC Opens Probe Into Archegos Chaos, Deutsche Bank Confirms ‘Quick Sale’ To Avoid All Losses
TYLER DURDEN, 31 March 2021
As more details from the now infamous debacle surrounding Tiger cub Archegos, whose massive derivative-based exposures spilled out into the open and transformed into the biggest and most painful rolling margin call to hit Wall Street since Lehman, we now know that at least six Prime Brokers scrambled to unwind the biggest hedge fund blowup since LTCM without hammering the overall market.
To “make a living in this business… be first, be smarter, or cheat…”
We previously noted that Morgan Stanley and Goldman Sachs were the “first” to break ranks and rejected the efforts of Credit Suisse’s emissaries who tried to create consensus to unwind the positions without sparking a panic.
As we now also know, Nomura and Credit Suisse which dithered and were unsure what to do, seeing their stock crushed and their counterparty risk hedge premia explode higher.. Continue reading “Article:SEC Opens Probe Into Archegos Chaos, Deutsche Bank Confirms ‘Quick Sale’ To Avoid All Losses”
Nomura CEO’s Honeymoon Ends With $2 Billion Archegos Debacle
Takashi Nakamichi and Takako Taniguchi, 31 March 2021
Nomura Holdings Inc.’s chief executive officer was having a bumper inaugural year in charge — until a U.S. family office spoiled the party.
Just days before Kentaro Okuda’s first anniversary as head of Japan’s biggest brokerage, the company warned of a “significant” loss from an unnamed U.S. client. That’s tied to the massive unwinding of leveraged bets by Bill Hwang’s Archegos Capital Management, according to people familiar with the matter. Continue reading “Article: Nomura CEO’s Honeymoon Ends With $2 Billion Archegos Debacle”
Report: SEC Opens Preliminary Investigation Into Archegos’ Bill Hwang After $30 Billion Stock Liquidation
Sarah Hansen, 31 March 2021
TOPLINE The Securities and Exchange Commission has opened a preliminary investigation into Sung Kook “Bill Hwang,” whose Archegos Capital Management roiled markets by defaulting on risky margin calls last week and prompted $30 billion in losses, Bloomberg reported Wednesday.
Archegos defaulted on highly leveraged margin calls last Friday, triggering a fire sale of some $30 billion in stocks including ViacomCBS, Baidu, Tencent Music Entertainment and Discovery Communications as banks rushed to unwind their positions. Credit Suisse and Nomura—two of the firm’s brokers—warned this week of “significant losses.” Goldman Sachs and Morgan Stanley were also forced to liquidate the positions they held for Archegos, but did so more quickly than other banks and as a result saw smaller losses, the Wall Street Journal reported Tuesday. Continue reading “Article: Report: SEC Opens Preliminary Investigation Into Archegos’ Bill Hwang After $30 Billion Stock Liquidation”
Comeback quashed for faith-driven investor Bill Hwang
Lawrence Delevingne, 30 March 2021
(Reuters) – Bill Hwang’s comeback was nearly complete. Once punished by U.S. and Asian regulators for stock trading rule violations at his former hedge fund, the New York investor rebuilt his fortune to about $10 billion. Major Wall Street banks once again competed for his business. And his charitable foundation’s coffers swelled by hundreds of millions of dollars.
Hwang was making big money again, inspired by a renewed Christian faith.
“When we create good companies through the capitalism that God has allowed, it enhances people’s lives….God delights in those things,” Hwang said in a video posted online in 2019 here. Continue reading “Article: Comeback quashed for faith-driven investor Bill Hwang”
One of World’s Greatest Hidden Fortunes Is Wiped Out in Days
Katherine Burton and Tom Maloney, 30 March 2021
From his perch high above Midtown Manhattan, just across from Carnegie Hall, Bill Hwang was quietly building one of the world’s greatest fortunes.
Even on Wall Street, few ever noticed him — until suddenly, everyone did.
Hwang and his private investment firm, Archegos Capital Management, are now at the center of one of the biggest margin calls of all time — a multibillion-dollar fiasco involving secretive market bets that were dangerously leveraged and unwound in a blink. Continue reading “Article: One of World’s Greatest Hidden Fortunes Is Wiped Out in Days”
Vegas Sands Probes Money-Laundering Safeguards at Singapore Unit
Chanyaporn Chanjaroen, 29 March 2021
Las Vegas Sands Corp. set up a special committee to look into potential breaches of anti-money laundering procedures at its Singapore casino, which has already been the target of probes by U.S. officials and local police.
The committee of three independent board members is reviewing money transfers among high-rollers and third parties at Marina Bay Sands, as well as any possible retaliation against whistle blowers, according to people familiar with the matter. U.S. law firm Vinson & Elkins LLP has been hired to assist with the review, according to the people, who asked not to be identified because of the confidentiality involved.
Las Vegas Sands declined to comment. Continue reading “Article: Vegas Sands Probes Money-Laundering Safeguards at Singapore Unit”
Banking Stocks Credit Suisse, Nomura Reeling From Archegos Hedge Fund Fire Sale
ADELIA CELLINI LINECKER, 29 March 2021
Investment banks Nomura (NMR), Credit Suisse (CS) and possibly others are on the hook for billions of dollars in losses as Archegos Capital Management hedge fund was forced to dump more shares Monday to meet liquidity minimums. Nomura and Credit Suisse stocks plunged more than 10%.
Among the companies affected by the fire sale that started last week are ViacomCBS (VIAC) and Discovery Communications (DISCA). Their shares sank more than 25% on Friday.
Archegos has sold nearly $30 billion in shares so far to meet a margin call. A broker makes a margin call to require a client to add funds to its account if the value of it drops below a certain level. The client, in this case Archegos, has to liquidate investments to meet that requirement. Continue reading “Article: Banking Stocks Credit Suisse, Nomura Reeling From Archegos Hedge Fund Fire Sale”
How Goldman And Other Wall Street Giants Loaned Billions To Someone Who Traded Like A Meme Stock Gambler
Kevin Dowd, 29 March 2021
Imagine if Goldman Sachs GS -0.5% lent a billion dollars to RoaringKitty.
News about margin calls is once again roiling markets. Except this time, instead of industry outsiders like Robinhood and RoaringKitty, a leading GameStop bull on WallStreetBets subreddit, the drama centers on traditional giants of the financial establishment. Continue reading “Article: How Goldman And Other Wall Street Giants Loaned Billions To Someone Who Traded Like A Meme Stock Gambler”
The Firm Behind The $30 Billion Firesale Shaking Financial Markets Disclosed Almost Nothing
Antoine Gara, 28 March 2021
Up until recently, the website of Archegos Capital Management, the firm behind a reported $30 billion financial firesale that is battering stocks worldwide, contained a giant image of Central Park. The vista displayed on Archegos’ webpage was a fitting homage to the views of its offices atop a Manhattan skyscraper on 57th street, until the site was taken down as the firm gets liquidated.
Archegos was a giant in U.S. financial markets, apparently holding tens of billions of dollars in securities, including massive exposures to companies like ViacomCBS, Discovery Communications and Baidu. It traded with Wall Street’s largest brokerages, and was headquartered at an expensive address housing many powerhouse investment firms. But when it came to routine financial disclosures, Archegos was virtually non-existent.
Forbes searched for a trace of Archegos on the Securities and Exchange Commission’s repository for securities filings, called EDGAR, short for Electronic Data Gathering, Analysis, and Retrieval. Amazingly, almost nothing came up. Continue reading “Article: The Firm Behind The $30 Billion Firesale Shaking Financial Markets Disclosed Almost Nothing”
Archegos Fallout Begins: Nomura Crashes 15% After Reporting Record $2BN Loss From “Transactions With US Client”
TYLER DURDEN, 28 March 2021
(Bloomberg) — Back in May 2016, Japanese mega-bank Nomura, announced that it had suffered its biggest-ever loss in history (of a rather tame by Western standards $40 million) from a single client, and which it then quickly blamed on an “incompetent” bond trader. Fast forward to today, when Nomura just suffered a far, far greater loss from a single client, this one is anything but boring.
Early on Monday local time, Nomura Holdings said it may have incurred a “significant loss” arising from transactions with a U.S. client.
The estimated amount of the claim against the client is about $2 billion based on market prices as of March 26, the Japanese brokerage said in a statement. The estimate is “subject to change depending on unwinding of the transactions and fluctuations in market prices.” Continue reading “Article: Archegos Fallout Begins: Nomura Crashes 15% After Reporting Record $2BN Loss From “Transactions With US Client””