SEC investigates Archegos for potential market manipulation

(Bloomberg) – A US investigation into Bill Hwang’s Archegos Capital Management collapse examines whether the company engaged in market manipulation.

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The United States Securities and Exchange Commission is closely examining the firm’s trading activity, including whether it has concealed the size of its bets on public companies, and recently served Archegos with a subpoena, people close to it said. folder. Authorities are examining whether Archegos has bought multiple stakes in the same companies in multiple banks in order to avoid triggering public disclosure rules. Overall, Hwang’s positions were massive.

Opening an SEC investigation is usually a preliminary step and does not mean that Hwang, who has not been charged with wrongdoing, will face enforcement action. Representatives for Hwang and the SEC declined to comment.

Archegos has accumulated a concentrated portfolio of stocks well over $ 100 billion using borrowed money. It imploded in March when some stocks fell, triggering margin calls from banks, which then ditched Hwang’s holdings.

Lenders, including Credit Suisse Group AG, Nomura Holdings Inc. and Morgan Stanley, have lost more than $ 10 billion, leading to internal investigations and the forced departure of senior executives. Regulators, meanwhile, are discussing whether to revise the rules exempting family offices like Hwang’s from tighter oversight.

SEC Chairman Gary Gensler told Congress in May that stricter disclosure laws may be warranted for investment firms after the Archegos debacle, and he then signaled his intention to return more data. sector accessible to the public.

Read more: Gensler says SEC plans more trade disclosures after Archegos

The fiasco has sparked public criticism from global regulators as well as inquiries from watchdogs around the world. The Department of Justice has also opened an investigation into the collapse of the company.

This is not the first time that Hwang has been the subject of a market manipulation investigation.

In 2012, after years of investigations by US and Hong Kong officials, the SEC accused its former company, Tiger Asia, of insider trading and manipulation of Chinese bank stocks. Hwang settled this case without admitting or denying wrongdoing, and Tiger Asia has pleaded guilty in the United States to wire fraud. At this point, Hwang closed his business and opened Archegos.

Read more: Bill Hwang lays low in New Jersey after losing $ 20 billion

It is not known what is left of Hwang’s fortune, and all that remains may be leftovers for others. The banks have said they plan to try to recover the money from Archegos, its related entities and individuals.

(Updates to add SEC assignment in second paragraph)

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