- The SEC is investigating whether
Bill Hwang 'sArchegos Capital engaged in market manipulation, according to Bloomberg. - The probe is scrutinizing the firm's
trading activity to see if it used multiple banks to amass positions in stocks to skirt disclosure rules. Archegos Capital suffered a $20 billion meltdown and cost banks billions after its highly levered portfolio collapsed in March.- Sign up here for our daily newsletter, 10 Things Before the Opening Bell.
The US Securities and Exchange Commission has launched an investigation into whether Bill Hwang's Archegos Capital engaged in potential market manipulation, according to a Bloomberg report.
The SEC is probing Archegos' trading activity to see if it concealed the size of its highly levered bets on public companies like ViacomCBS and Discovery, people familiar with the matter told Bloomberg. Including leverage, Archegos' portfolio was worth more than $100 billion, Bloomberg said.
Specifically, the regulator is looking into whether Archegos bought multiple stakes of the same companies across different banks to avoid triggering public disclosure rules, according to the report.
Archegos suffered a massive margin call in March after a number of its positions declined. That caused the swift unwind of several stocks within its portfolio by the banks that were on the hook for Archegos loans.
That unwind led to drastic one-day declines in a handful of stocks, and ultimately caused $10 billion in combined losses for banks like Credit Suisse, Nomura Holdings, and Morgan Stanley.
The opening of the SEC probe is the first step of an investigation and doesn't mean Hwang has been accused of any wrongdoing or will face regulatory consequences.
In the wake of the Archegos meltdown, SEC Chairman Gary Gensler told Congress in May that it would review more stringent disclosure laws for investment firms and mentioned plans to make certain industry data available to the public.