Despite being a rare “tiger cub”, Bill Hwang was not well known on Wall Street, until he made the biggest margin call of all time, causing billions of losses.
Former Hwang, the former Tiger Management founder Julian Robertson, ran the family’s office Archeogos Capital Management, which was so under-the-radar that it was not initially seen as a reason for the seismic shift in business that led Discovery’s shares down Was sent. 21 percent on Friday.
Hwang has since emerged as the man at the center of a multibillion trading fasco that is now expected to incur losses of more than $ 6 billion for some of its trading partners, including Nomura and Credit Suisse.
Wall Streeters are left behind by the speed of the crash and the size of the damage, as they are also left behind for a possible fight with MPs over the regulation of secret family offices run by Hwang.
“I have never seen anything like that – how quiet it was, how focused it was and how fast it disappeared,” Mike Novograz, a career macro investor and former partner at Goldman Sachs, told Bloomberg News. “This is one of the biggest losses of personal wealth in history.”
“You’ll wonder who else is out there with one of these invisible fortunes.” “The psychology of all, without any risk management, it is almost nihilism.”
Because Arcagos is a family office and not a regulated bank or hedge fund, the details of its accident are a mystery. Hwang founded Archives in 2012, accusing his hedge funds – Tiger Asia Management and Tiger Asia Partners – of insider trading following an SEC investigation.
The firm then allegedly used derivatives contracts to supercharge its trades with brokers, structuring them in such a way that Arcagos ‘positions were placed on the banks’ balance sheets.
Such contracts are not required to be disclosed, allegedly allowing Hwang to turn over its net worth, to approximately $ 10 billion in trades estimated at $ 50 billion or more.
The trades went haywire at some point last week, forcing their trading partners to start selling their positions to pay off their debts. This was a bad margin call.
Archeogus finally broke the silence on Tuesday, saying, “It’s a challenging time for the family office of Archgos Capital Management, our colleague and staff. All plans are being discussed as Mr. Hwang and the team go the best way” is. “
Sen. Elizabeth Warren, however, is already calling for more investigation.
“The Arkgots were all constructions of a dangerous situation in Meltdown – largely unregulated hedge funds, opaque derivatives, trading in private dark pools, high leverage and traders exiting the SEC’s enforcement.” Warren tweeted Tuesday.
“Regulators need to rely more than luck to remove risks to the financial system: we need transparency and strong oversight to ensure that the next hedge fund blowup doesn’t carry the economy with it,” he said. said.
Analysts attribute the loss of Credit Suisse to archeology as well as the year-end profits tied to a $ 4 billion-a-year business from the small collapse of financial startup Greenship earlier this month. Nomura estimated its losses at $ 2 billion.
Wells Fargo stated, on the contrary, that it had not experienced any losses, while Goldman Sachs has reportedly told investors that its losses would be unavoidable.
Despite the chaos, Hedge’s former boss, founder of respected hedge fund Tiger Management, suggested that he was still vested in the man.
Robertson, 88, said, “I’m so sad about it” Told Bloomberg In Monday’s interview, “I’m a big fan of Bill, and it probably can happen to anyone.” But I am sorry that this happened to Bill. “
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