“US judge investigates disaster surrounding Archegos investment fund”
US prosecutors have opened an investigation into the disaster surrounding the Archegos investment fund. Bloomberg News, based on informed sources, reported that the US Department of Justice had requested information on this from certain affected banks.
Archegos made risky investments which were largely financed with borrowed money. The fund had speculated heavily on higher prices for certain stocks, such as those of media company ViacomCBS. When these securities lost their value on the stock market, Archegos was no longer able to meet its financial obligations to the banks. They then sold the shares in large amounts as collateral, with losses amounting to $ 10 billion. Credit Suisse and Nomura, among others, were badly damaged.
It is not yet clear what the suspicions of the plaintiffs regarding the violations of Archegos’ law are. The spokespersons for the Department of Justice do not want the questions answered. So far, the authorities have not accused either the fund or the banks concerned of any fault.
The fall of Archegos has already sparked much criticism for the control of these mutual funds, the so-called family offices. They formally act as asset managers for wealthy families, which means they are less strictly supervised than, say, hedge funds. This allowed Archegos to strike large, dangerous and invisible poses.
Bill Hwang led the Archegos. It was already controversial before the disaster with the Archegos. Pleaded guilty to the 2012 insider trading ban and settled $ 44 million.
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