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Traders Work on the Floor of the Exchange on April 7 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 e-cigarette 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 single-largest 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 blue-chip 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.
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