Archegos, a family office, brings Nomura and Credit Suisse big losses

BEFORE FRIDAY March 26th, few people may have heard of Archegos Capital Management, an investment vehicle run by Bill Hwang, a former hedge-fund trader with a chequered past. But it has emerged as the entity behind a fire sale of at least $20bn-worth of equities, which roiled stockmarkets on an otherwise unremarkable Friday and has left at least two global banks—Credit Suisse and Nomura—facing multi-billion-dollar losses. Financial regulators in America and Europe will have a say before the affair has run its course.

The plotline has already taken shape. Archegos is a so-called family office. It manages the private wealth of Mr Hwang, who once worked for Tiger Management, a celebrated hedge fund. One of Archegos’s strategies was long-short equity. The main idea is to be indifferent to the direction of the overall market by betting that the share prices of some stocks will rise while the prices of other stocks fall. The hope is that the longs do better than the shorts. But when markets are volatile the strategy can come unstuck. This is what seems to have happened to Archegos. 

The first sign of trouble came that Friday when Goldman Sachs and Morgan Stanley, two Wall Street behemoths, began selling large blocks of shares for an unnamed client who had missed a margin call—a demand for more collateral to cover...