Iran Press/ America: Until recently, Bill Hwang sat atop one of the biggest — and perhaps least known — fortunes on Wall Street. Then his luck ran out.
Banks were eager to do business with Bill Hwang and his Archegos Capital Management — until he ran out of money.
Hwang, a 57-year-old veteran investor, managed $10 billion through his private investment firm, Archegos Capital Management, The New York Times reported.
He borrowed billions of dollars from Wall Street banks to build enormous positions in a few American and Chinese stocks. By mid-March, Hwang was the financial force behind $20 billion in shares of ViacomCBS, effectively making him the media company’s single largest institutional shareholder. But few knew about his total exposure, since the shares were mostly held through complex financial instruments, called derivatives, created by the banks.
That changed in late March, after shares of ViacomCBS fell precipitously and the lenders demanded their money. When Archegos couldn’t pay, they seized its assets and sold them off, leading to one of the biggest implosions of an investment firm since the 2008 financial crisis.
Almost overnight, Hwang’s personal wealth shriveled. It’s a tale as old as Wall Street itself, where the right combination of ambition, savvy and timing can generate fantastic profits — only to crumble in an instant when conditions change.
“That whole affair is indicative of the loose regulatory environment over the last several years,” said Charles Geisst, a historian of Wall Street. “Archegos was able to hide its identity from regulators by leveraging through banks in what has to be the best example of shadow trading.”
The meltdown of Hwang’s firm had ripple effects. Two of his bank lenders have revealed billions of dollars in losses. ViacomCBS saw its share price halved in a week.
The Securities and Exchange Commission opened a preliminary inquiry into Archegos, two people familiar with the matter said, and market watchers are calling for tougher oversight of family offices like Hwang’s — private investment vehicles of the wealthy that are estimated to control several trillion dollars in assets. Others are calling for more transparency in the market for the kind of derivatives sold to Archegos.
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