Lawyers at the Securities and Exchange Commission, Archegos Capital Management, $10 billion family investment office suddenly crashed In March, it slammed the stock market as its losses hit the banking sector.
The subpoena was served on the firm in the past few weeks, according to a person familiar with the matter who is not authorized to speak publicly.
A subpoena is not particularly surprising. Attorneys from the SEC, the Manhattan U.S. attorney’s office, and the Commodity Futures Trading Commission have been investigating the collapse of Archegos since it placed heavy bets on a small number of stocks. quickly resolved seven months ago. Despite this, the subpoena marks the transition to a formal investigation.
An SEC spokesperson declined to comment on the investigation. First reported by Bloomberg. A spokesperson for Archegos declined to comment.
According to a person familiar with the matter, investigators mainly focus on whether Archegos founder Bill Hwang misled banks where he invested in complex derivatives about the risk he was taking on his firm. The SEC is also believed to be investigating whether Archegos violated any regulatory rules that would require the firm to disclose some large stock positions.
In his speech before Congress, SEC chairman Gary Gensler said the Archegos trade fiasco has opened up loopholes in regulatory requirements for investment firms and lightly regulated family offices when it comes to announcing large positions in derivatives.
The downfall of Archegos especially Credit SuisseLosing $5.5 billion, it caused a major management shake-up. A law firm’s report, held by the bank’s board of directors, found a “failure of key management and control” in the bank.