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Thursday, April 22, 2021

Report: SEC opens preliminary investigation into Bill Hwang d’Archegos after $ 30 billion stock liquidation

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Topline

The Securities and Exchange Commission has opened a preliminary investigation into Sung Kook “Bill Hwang”, whose Archegos Capital Management rocked the markets by defaulting on risky margin calls last week and caused losses of $ 30 billion, reported Bloomberg Wednesday.

READ  SEC opens investigation into Bill Hwang after Archegos merger: Bloomberg News

Highlights

Bloomberg noted that regulatory review is routine after a market incident like the one that occurred last week, and is in its early stages and will not necessarily lead to allegations of wrongdoing.

Since Archegos de Hwang is a family office, there was no need to meet certain SEC reporting requirements which in other cases could have set off red flags for regulators.

Hwang settled with the SEC in an insider trading and market manipulation case in 2012.

His former firm, Tiger Asia Management, pleaded guilty.

Key context

Archegos defaulted on highly leveraged margin calls last Friday, sparking an inflammatory sell-off of some $ 30 billion of shares, 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 positions they held for Archegos, but did so faster than other banks and the Wall Street newspaper reported Tuesday.

Large number

10 billion dollars. This is what the big banks could lose as a result of their Archegos liquidation deals, analysts at JPMorgan said this week.

To monitor

After last week’s rout, Wall Street investors are starting to fear that the big banks are considering cracking down on the risky margin debt that caused Archegos to defaults, which could lead to more liquidation sales if investors are forced to leave their positions.

Further reading

The company behind the $ 30 billion fire in financial markets has disclosed next to nothing (UKTN)

Here’s why Wall Street is worried about more forced sales after Friday’s $ 30 billion fire sale (UKTN)

Nomura, Credit Suisse warn of ‘significant’ losses after sale of Archegos fire, bank stocks collapse (UKTN)

Bill Hwang of Archegos Capital has invested $ 590 million in his charitable foundation. Here is where it happened. (UKTN)

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