Archegos Capital Management

Archegos Capital Management

Company type	Limited partnership
Industry	Investment management
Founded	2013
Founder	Bill Hwang
Defunct	2021
Fate	Collapse due to default on margin calls; firm closed
Headquarters	New York City , United States
Products	Family office wealth management, total return swaps

Archegos Capital Management operated as a limited partnership family office responsible for managing the private wealth of Bill Hwang, at its peak controlling assets exceeding $36 billion. On April 27, 2022, federal authorities charged Hwang with fraud and racketeering offenses.

On March 26, 2021, Archegos defaulted on margin calls issued by several leading international investment banks, including Credit Suisse, Nomura Holdings, Goldman Sachs, and Morgan Stanley. The firm maintained substantial, concentrated stakes in companies such as ViacomCBS, Baidu, Vipshop, and Farfetch. Its heavy reliance on total return swaps allowed it to obscure the extent of its exposure from lenders, resulting in significant losses when market positions deteriorated.

Estimates suggest Hwang incurred losses ranging from $8 billion over ten days to $20 billion within two days during the firm's collapse. The downfall of Archegos is frequently likened to the crisis experienced by Long Term Capital Management due to its swift repercussions on financial markets and major banking institutions.

History

Bill Hwang, previously associated with Tiger Cub fund Tiger Asia Management, established Archegos Capital Management in 2013. By 2020, the firm had expanded its assets under management to $10 billion. The name "Archegos" is derived from the Greek word for "leader." Tiger Asia had admitted guilt to insider trading charges in 2012 and paid a $44 million penalty; subsequently, Hwang was prohibited from trading in Hong Kong for four years starting in 2014.

Archegos predominantly utilized total return swaps, enabling it to hold large stock positions without public disclosure through various banks. The fund operated with significant leverage across multiple prime brokers, many of whom were unaware of the total aggregated exposure.

March 2021 losses

Losses by bank

Institution	Loss (US$ mln)
Credit Suisse	Template:Nts
Nomura	Template:Nts
Morgan Stanley	Template:Nts
UBS	Template:Nts
Mitsubishi UFJ Financial	Template:Nts

On March 26, 2021, Archegos failed to satisfy margin calls, which led prime brokers to liquidate billions of dollars’ worth of stock positions linked to its total return swaps. This action caused a sharp drop in shares of ViacomCBS and Discovery, Inc. Credit Suisse and Nomura experienced the most substantial losses; Credit Suisse’s stock price fell by 14%, while Nomura’s declined by 16%. Goldman Sachs and Morgan Stanley managed to limit their losses through rapid responses, whereas Deutsche Bank avoided losses entirely by promptly closing out positions.

Mitsubishi UFJ Financial Group disclosed a $300 million loss associated with Archegos. The U.S. Securities and Exchange Commission initiated an inquiry into the circumstances surrounding the collapse. Globally, this event triggered a sell-off in banking equities and impacted major indices such as the Nikkei 225.

In April 2021, the U.S. Senate Banking Committee requested detailed information from Credit Suisse, Nomura, Goldman Sachs, and Morgan Stanley about the Archegos collapse. Credit Suisse announced a $4.7 billion loss related to Archegos exposure and revealed plans to raise up to $2 billion in new capital. Several senior executives resigned amid the crisis. Subsequent reports indicated Credit Suisse’s losses reached $5.5 billion due to exposure exceeding $20 billion—amounting to more than half of its capital at that time.

Morgan Stanley reported nearly $1 billion in losses connected to Archegos positions, while Nomura’s losses increased to $2.85 billion. UBS also reported a loss of $774 million tied to the incident.

In April 2022, Bill Hwang and former CFO Patrick Halligan were arrested and charged with racketeering conspiracy, securities fraud, and wire fraud related to stock price manipulation connected to Archegos’ downfall. Both defendants pleaded not guilty.

Following UBS’s acquisition of Credit Suisse in July 2023, regulators imposed a $387 million fine on Credit Suisse for inadequate risk management practices linked to the Archegos episode.