2 | Tuesday, April 13, 2021 HONG KONG EDITION | CHINA DAILY PAGE TWO

Clockwise from left: A view of the New York Stock Exchange. BRENDAN MCDERMID / FILE PHOTO / REUTERS Traders work on the floor of the exchange on April 7. COLIN ZIEMER / NEW YORK STOCK EXCHANGE VIA AP Bill Hwang (right), founder of Tiger Asia Management, leaves a federal court in Newark, New Jersey, with his attorney Lawrence Lustberg (left) after a hearing in December 2012. EMILE WAMSTEKER / BLOOMBERG VIA GETTY IMAGES Trader: Fallout resembles crisis in 2008

From page 1 and Morgan Stanley, the senator mately led to the company closing in from $70 million to $500 million in said he is “troubled, but not sur­ 2012, when Hwang pleaded guilty to less than a decade. The foundation Jim Collins, CEO of Excelsior Cap­ prised, by news reports that Arche­ wire fraud relating to illegal trading has donated tens of millions of dol­ ital Partners, said: “At the close of gos entered into risky derivatives of Chinese bank stocks and sepa­ lars to Christian organizations. every trading day, Archegos would transactions facilitated by major rately paid $44 million to US US Internal Revenue Service settle its swap accounts. If the total investment banks, resulting in pan­ authorities to settle insider trading records show the foundation was value of all positions in the account icked selling of stocks worth tens of charges. involved in some of the types of rose, the bank in question would billions of dollars and those banks Shortly after closing Tiger Asia, complex financial transactions that pay Archegos cash. If the value fell, collectively losing nearly $10 bil­ Hwang opened Archegos, named Hwang used at Archegos. While the Archegos would have to put up lion”. after the Greek word for “leader” or foundation received millions in more collateral or, in industry par­ Early this year, Hwang focused “prince”. donations of stocks, records show it lance, post margin.” his trading on ViacomCBS, which The new company, which also also bought and sold derivatives After ViacomCBS shares plunged was optimistic about its new invested in US and Asian stocks, was with mixed results. late last month, Hwang’s lenders streaming service, media company similar to a hedge fund, but its In 2016 and 2017, Hwang contrib­ demanded their money, known as a Discovery, Chinese stocks RLX assets comprised Hwang’s personal uted $210 million of Netflix stock to margin call — when a bank asks a cli­ Technologies — an e­cigarette com­ Credit Suisse was among the companies that experienced wealth and that of certain family the foundation, and from 2015 to ent to put up more collateral if a pany — and GSX Techedu — an edu­ heavy losses after Archegos Capital Management defaulted members. The arrangement shield­ 2018, he gave it $236 million of trade partly funded with borrowed cation company. on margin calls. ARND WIEGMANN / FILE PHOTO / REUTERS ed Archegos from regulatory scruti­ Amazon stock, tax records show. He money has fallen sharply in value. If By January, ViacomCBS stock, ny because of the lack of public donated another $48 million of the client cannot afford to do that, which was priced at $12 a year ago, investors. Expedia and Facebook stock. the lender sells the securities to try to was nearing $50. Hwang kept build­ Hwang made large, concentrated Hwang also gave the charity smaller recoup the funds it is owed. ing his stake through the swaps, bets on shares in South Korea, amounts of stock in Facebook, When Archegos could not pay, the which gave him the returns without The collapse of Archegos Capital Japan, China and elsewhere, using Hawaiian Airlines and Expedia. lenders seized the assets (the stocks) actually owning the shares, people significant amounts of borrowed From 2007 to 2018, the founda­ and sold them, leading to one of the familiar with his trading told The Management, and the billions of dollars money. tion distributed nearly $80 million, biggest implosions of an investment New York Times. in losses to investors and other market Archegos’ assets rose from $200 with amounts rising steadily over company since the 2008 financial By the middle of last month, as million when he founded it in 2012 time, according to the Forbes web­ crisis. Hwang’s personal wealth the stock neared $100, Hwang had participants, is a vivid demonstration of to more than $10 billion. site. Most of it went to Korean Chris­ largely disappeared. become the single­largest institu­ the havoc that errant large investment Larry McDonald, a former Wall tian causes. On Wednesday, CNBC reported tional investor in ViacomCBS, Street trader and creator of the Bear In a video posted by his founda­ that Morgan Stanley sold about $5 according to those sources and an vehicles called ‘family offices’ can wreak Traps Report, an investment news­ tion in 2019, Hwang said: “I’m not billion of Archegos’ stocks on March analysis of public filings by the on our financial markets.” letter for hedge fund professionals, afraid of death or money. The peo­ 25, the night before a “fire sale” hit newspaper. estimates that Hwang must have ple on Wall Street wonder about rivals. However, if ViacomCBS shares Dan Berkovitz, commissioner on the US Commodity Futures been compiling annual returns of 35 the freedom that I have. Ultimate­ Goldman Sachs unloaded $10 bil­ were to suddenly reverse, he would Trading Commission percent or more to see such an explo­ ly, the most important thing is the lion in Archegos holdings the next have to pay the banks to cover their sion in assets under management, Bible. day. The New York investment bank losses — or be cleaned out. the Fox News website reported. “When we create good companies sold three blocks of shares on March On March 22, ViacomCBS subprime mortgage crisis 14 years age 50. Hwang and his mother “If those numbers are accurate, through the capitalism that God has 29, a source familiar with the sale announced a new public offering, ago. Then, as now, the trouble was a moved to Los Angeles, where he they are truly astounding,” McDo­ allowed, it enhances people’s lives. process said. It sold $6.6 billion of which it hoped would produce $3 series of increasingly irresponsible studied economics at UCLA, from nald said. … God delights in those things.” shares in Baidu, Tencent Music billion to fund its strategic plans, loans. As long as housing prices kept which he said he barely managed to On his being a big investor in Entertainment Group and Vipshop including a streaming service. rising, lenders ignored the growing graduate. Seldom noticed LinkedIn, which he described as a Holdings before the US market Four people involved with the risks. Only when homeowners He later earned an MBA at Car­ Traders said Hwang became one company that helps people realize opened. offering told The New York Times stopped paying did reality bite — the negie Mellon University in Pitts­ of Wall Street’s biggest customers, their potential, Hwang said: “Do I This was followed by the sale of that bankers were counting on banks had all financed so much bor­ burgh, before working for about which may account for blue­chip think God loves it? Of course! I’m $1.7 billion of shares in ViacomCBS Hwang being the lead investor and rowing that the fallout couldn’t be six years at South Korean finan­ companies overlooking his troubled like a little child looking for what I and $2.3 billion of shares in Discov­ buying at least $300 million of the contained.” cial company Hyundai Securities regulatory record. can do today, where I can invest, to ery, Farfetch, iQIYI and GSX Teche­ shares. Credit Suisse, Switzerland’s No 2 in New York. He eventually landed According to media reports, he please our God.” du later that day. Discovery Communications bank, which was forced to dump a coveted job as an investment tended to keep to himself. He said in a 2018 interview: “I’m On April 6, Credit Suisse said it shares had a similar rise, moving more than $2 billion worth of stock adviser for Julian Robertson, the Bloomberg Wealth reported: decreasing the amount of money would take a $4.7 billion loss from from $19.27 in October to a high of to end exposure to Archegos, said revered stock investor whose “Even on Wall Street, few ever under my name, in order to do dealings with Archegos, prompting $77.27 five months later, only to fall Lara Warner its chief risk and com­ Tiger Management, founded in noticed him. Until suddenly every­ things that God loves. I do it because it to overhaul the leadership of its to about $41. The company also pliance officer, and Brian Chin, 1980, was considered a hedge one did.” I like God more than I like money.” investment bank and risk divisions. plans a streaming service, but inves­ investment banking head, were fund pioneer. Unlike other money managers, Credit Suisse has been in touch tors believe competitors such as stepping down following the losses. After Robertson closed the New Hwang avoided the financial media with Swiss financial market supervi­ Vivid demonstration Netflix, Amazon Prime and Disney+ Credit Suisse Chief Executive York fund to outside investors in and never made the annual billion­ sor FINMA, the Prudential Regula­ Dan Berkovitz, a commissioner have an advantage. Thomas Gottstein said in a state­ 2000, the following year he helped aires lists published by outlets such tion Authority in the United on the US Commodity Futures Trad­ Sometime between announce­ ment on April 5: “The significant seed Hwang’s hedge fund — Tiger as Forbes. When he was quoted in Kingdom and the US Federal Reserve ing Commission, said in a statement ment of the ViacomCBS deal and its loss in our Prime Services business Asia — which focused on Asian the media, it was mostly about his over the Archegos developments, a on April 1, “The collapse of Archegos completion on March 24, Hwang relating to the failure of a US­based stocks and at one point managed $3 Christian faith and charitable con­ source familiar with the matter said. Capital Management, and the bil­ changed his plans. The reasons are hedge fund is unacceptable. Serious billion for outside investors. tributions. The US Securities and Exchange lions of dollars in losses to investors not entirely clear, but shares of RLX lessons will be learned.” According to The Wall Street Hwang, 57, and his wife, who have Commission and the UK’s Financial and other market participants, is a and GSX both plummeted in Asian Nomura, Japan’s largest invest­ Journal, Tiger Asia was based in a college­age daughter, live quietly Conduct Authority have launched vivid demonstration of the havoc markets around the same time. ment bank, warned on March 29 that New York and became one of the in an affluent, predominantly Asian preliminary investigations into the that errant large investment vehi­ Hwang’s decision resulted in the it faced a possible $2 billion loss due biggest Asia­focused hedge funds, area of Tenafly, New Jersey, a Archegos meltdown, according to a cles called ‘family offices’ can wreak ViacomCBS fundraising effort end­ to transactions with a “US client”. running more than $5 billion at its 30­minute drive from his office on different source familiar with the on our financial markets. ing up with $2.65 billion in new cap­ While some banks were able to peak. Seventh Avenue in Manhattan, situation. “A ‘family office’ has nothing to do ital, short of the target. offload collateral related to Arche­ Robertson, now 88, said he was which overlooks Central Park. The SEC said in a statement on with ordinary families. Rather, it is By March 25, Archegos was reel­ gos relatively quickly, including “very sad” about Hwang’s fall. A recent story on Bloomberg’s March 29, “We have been monitor­ an investment vehicle used by centi­ ing. ViacomCBS’ falling stock price shares of ViacomCBS, Baidu and “I’m a great fan of Bill and it could website said, “A generous benefactor ing the situation and communicat­ millionaires and billionaires to was triggering margin calls from its Tencent Music Entertainment probably happen to anyone, but I’m to a range of unglamorous, mostly ing with market participants since grow their wealth, reduce their tax­ prime brokers that Hwang could Group, Credit Suisse was still selling sorry it happened to Bill,” he told conservative Christian causes … last week.” es and plan their estates.” not fully meet. on April 5. Business Insider on March 29. Hwang eschews the trappings of Japanese Finance Minister Taro Senate Banking Committee As ViacomCBS shares flooded the In 2008, Tiger Asia lost money extravagant wealth, rides the bus, Aso said on Friday that Tokyo is Chairman Sherrod Brown, an Ohio market due to enormous sales by Economics student when investment bank Lehman flies commercial and lives in what is, looking into the financial losses Democrat, wants answers from banks, Hwang’s wealth plummeted. Sung Kook (Bill) Hwang was born Brothers filed for bankruptcy. by billionaire standards, humble sur­ incurred by Japan’s Mitsubishi UFJ Credit Suisse and other banks on His problem was that he invested in South Korea and moved to Las The next year, Hong Kong regula­ roundings in suburban New Jersey.” Financial Group and Nomura, and their margin calls and market activi­ in a relatively limited number of com­ Vegas in 1982 as a teenager. He spoke tors accused the fund of using confi­ In 2006, Hwang established the will share information on the mat­ ty related to Archegos. panies, with several of them running little English, and first worked as a dential information it received to Grace and Mercy Foundation, a ter with the Bank of Japan and over­ In a letter sent on Wednesday to into trouble simultaneously. cook at a McDonald’s restaurant on trade some Chinese bank stocks. nonprofit based in New York that seas authorities. Credit Suisse Securities, Nomura Bloomberg Business Week report­ The Strip. Within a year, his father, Investment losses and regulatory sponsors Bible readings and reli­ Holding America, Goldman Sachs ed: “It’s all eerily reminiscent of the an evangelical minister, had died at issues in Hong Kong and the US ulti­ gious book clubs. He raised its assets Reuters contributed to this story.