UBS Joins Morgan Stanley With Surprise $861 Million Archegos Hit
Marion Halftermeyer, 27 April 2021
UBS Group AG disclosed an $861 million hit from the implosion of Archegos Capital Management and vowed to improve risk management, joining Morgan Stanley in blindsiding investors who’d been kept in the dark for weeks about the size of the losses.
The loss, mostly booked in the first quarter, overshadowed a better-than-expected profit, with strong performance in the key wealth management business. Chief Executive Officer Ralph Hamers said while the bank will require more transparency from clients to prevent such losses in the future, he defended the business with hedge funds as “strategic” and said he had no plans to follow rival Credit Suisse Group AG in cutting back lending.
“Clearly, we are very disappointed at this situation,” he said in an interview with Bloomberg TV. “We are reviewing the different prime brokerage relationships, as well as the GFO — the family office relationships.” Continue reading “Article: UBS Joins Morgan Stanley With Surprise $861 Million Archegos Hit”
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”
Morgan Stanley Burned by $911 Million of Losses on Archegos
Sridhar Natarajan, 16 April 2021
(Bloomberg) — Morgan Stanley became the latest bank to get swept up in the implosion of Archegos Capital Management, reporting $911 million in total losses related to the debacle.
“The current quarter includes a loss of $644 million related to a credit event for a single prime brokerage client, and $267 million of subsequent trading losses through the end of the quarter related to the same event,” Morgan Stanley said Friday in announcing first-quarter earnings.
The loss was tied to Archegos, said a person with knowledge of the matter.
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Pension Fund Drops Suit Against Tesla Over $1.8B Bond Offer
Rachel Stone, 16 April 2021
A pension fund voluntarily ended its proposed class action against Tesla and its multibillionaire founder, Elon Musk, which claimed the automaker and a group of big banks acting as underwriters misled investors on a $1.8 billion bond offering.
Inter-Local Pension Fund GCC/IBT has bowed out of its securities fraud suit in California federal court following a decision in the Ninth Circuit in March not to rehear a related case, according to a notice filed Thursday. Continue reading “Article: Pension Fund Drops Suit Against Tesla Over $1.8B Bond Offer”
Morgan Stanley reveals nearly $1B loss from Archegos implosion
Reuters, 16 April 2021
Morgan Stanley lost nearly $1 billion from the collapse of family office Archegos Capital Management, the bank said Friday, muddying its 150 percent jump in first-quarter profit that was powered by a boom in trading and deal-making.
Morgan Stanley was one of several banks that had exposure to Archegos, which defaulted on margin calls late last month and triggered a fire sale of stocks across Wall Street. Continue reading “Article: Morgan Stanley reveals nearly $1B loss from Archegos implosion”
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”
Can Credit Suisse Avoid Becoming The ‘Deutsche Bank’ Of Switzerland?
TYLER DURDEN, 08 April 2021
Markets were shaken but unstirred by the collapse of Greensill and the Archegos unwind trades. Credit Suisse is the ultimate loser of the two scandals – reputationally damaged and holed below the water line. The bank is paying the price of years of flawed management, poor risk awareness. and its self-belief it was still a Tier 1 global player. Its’ challenge is to avoid becoming the Deutsche Bank of Switzerland – which it will struggle to do without a radical and unlikely shakeout. Continue reading “Article: Can Credit Suisse Avoid Becoming The ‘Deutsche Bank’ Of Switzerland?”
“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”
Morgan Stanley backs Bitcoin for 12 mutual funds
EXPLICA .CO, 02 April 2021
US investment bank Morgan Stanley has filed an update to its prospectus related to bitcoin (BTC) with the Securities and Exchange Commission (SEC). The institution applied for 12 of its funds to have exposure with the first cryptocurrency.
According to the bank, the funds would have indirect exposure to bitcoin in two ways: through cash-settled futures and through the Grayscale Bitcoin Trust (GBTC), one of the world’s largest trusts focused on digital assets.
On the type of futures that funds can invest in, Morgan Stanley noted: “The only bitcoin futures that a fund can invest in are cash-settled bitcoin futures that are traded on listed futures exchanges. CFTC ‘.
In the document, the bank explains that the Selected funds will be able to invest up to 25% of their assets in bitcoin. The institution also stressed that this type of operation implies a risk of illiquidity since bitcoin futures are not traded so “intensely” because they are relatively new. Continue reading “Article: Morgan Stanley backs Bitcoin for 12 mutual funds”
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”
Big banks win dismissal of U.S. Treasury rigging litigation
Jonathan Stempel, 31 March 2021
NEW YORK (Reuters) – A U.S. judge on Wednesday dismissed long-running litigation accusing 10 large banks of conspiring to suppress competition in the now $21.2 trillion market for U.S. Treasury securities.
U.S. District Judge Paul Gardephe in Manhattan ruled against 21 pension, retirement and benefit funds, as well as unions, banks, individuals, and companies that traded in Treasuries, in the proposed antitrust class action.
The defendants included Bank of America, Barclays, BNP Paribas, Citigroup, Credit Suisse, Goldman Sachs, JPMorgan Chase, Morgan Stanley, NatWest Group and UBS, as well as trading platform operator Tradeweb Markets. Continue reading “Article: Big banks win dismissal of U.S. Treasury rigging litigation”
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”
Wall Street Giants Beat Treasury Auction Rigging MDL
Dean Seal, 30 March 2021
A New York federal judge ruled Wednesday that he has yet to see any direct evidence that Wall Street banks including Goldman Sachs and Credit Suisse conspired to manipulate the $14 trillion market for securities issued by the U.S. Treasury Department.
U.S. District Judge Paul G. Gardephe dismissed long-running multidistrict litigation accusing a group of banks that also included JPMorgan Chase and Morgan Stanley of rigging auctions for Treasury Department bonds and other securities, on top of reducing competition in a secondary market for those securities. Continue reading “Article: Wall Street Giants Beat Treasury Auction Rigging MDL”
A “Very Surprised” JPMorgan Calculates The Damage From The Archegos Collapse
TYLER DURDEN, 30 March 2021
Unlike the devastating London Whale debacle in 2012, which was all JPMorgan eventually drawn and quartered quite theatrically before Congress (and was a clear explanation of how banks used Fed reserves to manipulate markets, something most market participants had no idea was possible), this time JPMorgan was nowhere to be found in the aftermath of the historic margin call that destroyed hedge fund Archegos. Which is may explain why JPMorgan bank analyst Kian Abouhossein admits he is quite “puzzled” by the recent fallout from the Archegos implosion (or maybe JPM simply was not a Prime Broker of the notorious Tiger cub), which however does not prevent him from trying to calculate the capital at risk from the Archegos collapse. Continue reading “Article: A “Very Surprised” JPMorgan Calculates The Damage From The Archegos Collapse”