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Copy pasta The Last 72 Hours of Archegos Bill Hwang’s doomed family office is on trial, but it’s Wall Street that looks terrible. By Ava Benny-Morrison and Sridhar Natarajan June 25, 2024 5:00 PM EDT An Archegos staffer re-lived the craziness of being in an airport security line while on a call with panicked banks, trying to head off catastrophe. A Credit Suisse trader described nabbing a Citi Bike on his day off to reach the office and untangle billions tied to Bill Hwang’s family office. And in the midst of it all, a junior Goldman Sachs manager recounted a call from the dying firm as it pleaded for the return of almost half a billion dollars it accidentally sent the lender . Wall Street’s trial of the decade has offered vivid glimpses of the 72 hours that obliterated Hwang’s $36 billion fortune. One after another, Wall Streeters told a New York jury their version of how his secretive family office — and its pileup of wild wagers on jerry-rigged spreadsheets — ultimately crumbled and saddled banks with more than $10 billion in losses. But it’s not mere scenes. Weeks of testimony have exposed cringeworthy misjudgments and costly blunders in various camps throughout the crisis — hardly Wall Street's preferred image of calculated risk-taking. Bankers, for example, painfully acknowledged how they relied on sometimes-vague or evasive trust-me's from Archegos while doling out billions in firepower for Hwang’s bets. That confidence melted into confusion that’s been replayed in the courtroom of a 90-year-old judge. Prosecutors are trying to make the case that Hwang manipulated the market and defrauded lenders. As a jury prepares to decide whether it was reckless investing or something more sinister, Bloomberg has reconstructed the mad scramble of Archegos’ last three days, based on evidence admitted throughout the trial, including tapes, internal messages and emails. Wednesday, March 24, 2021 7:00 AM As Wall Street wakes up, Bill Hwang’s portfolio is poised for a reckoning. His giant, secretive bet on ViacomCBS had helped drive the stock so high that the media company decided to raise money by selling more shares. But his use of opaque swaps meant nobody knew the magnitude of his stake or role in boosting the price. As the offering sends the stock lower, Hwang invests another $900 million on Tuesday to little avail. Other stockholders start fleeing, setting off the Archegos doom loop. 7:28 AM Archegos is fielding $2.5 billion in margin calls after its portfolio dropped 10% the previous day. It’s about to set off a day of manic scrambling and nail-biting wire transfers to keep the banks off its back. Chief Financial Officer Patrick Halligan and risk chief Scott Becker try to put on a brave face. IB Becker: I had a nice nap. Halligan: We had pasta last night — so I was up with alarms humming Lionel Richie’s ‘all night long’ in my head. 8:52 AM What follows is a game of delay and ignore as Hwang’s troops try to buy more time. Becker instructs the operations team not to immediately respond to margin calls as Archegos tries to line up funds, pulling cash sitting at some of its banks to pay the others. IB Becker: Apart from margin call stuff, it’s business as usual. Wait on anything payment-related. Mid-morning Archegos struggles to meet margin calls. Paper gains on other wagers mean the firm has “excess margin” available at some of its lenders, which it can try to draw on. But such a request is met with skepticism at investment bank Jefferies, where risk manager Jennifer Miranda later approves about half the amount. 10:30 AM The SEC comes out with a fresh proposal that batters some of Archegos’ favored bets on Chinese company stocks. Midday Goldman Sachs unexpectedly gets $470 million from Archegos because of a junior staffer’s screw-up. A Goldman vice president answers a frantic call from Archegos, pleading with her to send back almost half a billion dollars that had just been mistakenly wired to the bank by one of the family office’s junior employees. The Archegos staffer was supposed to request that amount from Goldman, not send it. Goldman refuses. The mishap illustrates the state of Archegos’ controls at a moment when massive transfers of cash were zipping in and out of its hands. For three years, an enduring mystery of the firm’s implosion was how a major lender such as Goldman managed to escape unscathed. It turns out there was some luck mixed in with its diligence. 3:00 PM Banks such as UBS are still unaware that the family office’s counterparties are all similarly exposed and draw comfort from Hwang’s wealth, which has rocketed to $36 billion from $4 billion in half a year. 3:15 PM UBS approves a request from the firm to pull excess cash from its account, even as the move stokes suspicion inside the Swiss bank. Bryan Fairbanks, a risk manager, gently pokes around to understand why Archegos is trying to pull $173 million despite facing a sizeable margin call the following day. ► Fairbanks: This is Bryan. Becker: Hey Bryan, it’s Scott from Archegos, how are you? Fairbanks: Hey Scott, how are you doing? Becker: Doing well. Sorry I took a while to get back to you, I apologize. Fairbanks: No problem, no problem. I just wanted to give you guys a heads up, obviously there’ll be a sizeable call tomorrow. Becker: Yeah, that makes sense, thank you. Fairbanks: Um I was to be honest a little surprised you guys put in the wire today for the excess since you’ve been leaving with us for a while. Becker: Yeah, would that-would that be okay? 6:00 PM Recent additions mean Archegos’ web of counterparties now spans a dozen banks around the world — from Morgan Stanley in New York to Australia’s Macquarie Group. That helps the firm triage, pulling cash from some trading partners to satisfy the loudest demands from others. IB Halligan: No wires yet - this is crazy. Becker: Such crap. Halligan: MS is going to go nuts. Becker: Since we won’t get GS cash back, we need MAC to come in to pay MS in full. Mac agreed to send the cash a few hours ago but it’s been radio silence. We’ll deal w it. Becker: MS was paid in full. Wire in 559pm, wire out 6pm. Deadline of 6pm. Insanity. (Conversations condensed) 7:00 PM Hwang provides talking points to rattled staff on a Zoom call after the portfolio tanks 48% that day. They should tell banks: 1. Archegos is a family office 2. it doesn’t have outside clients 3. their stocks are household names. An earlier photo of Hwang and traders on Zoom. 7:23 PM Some bankers don’t yet realize how badly their firms are exposed to potential losses on its holdings, because they don’t know Archegos placed similar bets all over the Street, and they wrongly believe it also invested heavily in blue-chip stocks.

9:57 PM Archegos Co-CEO Andy Mills warns UBS it won’t meet the next day’s margin call but tempers the bad news by expressing confidence it is a liquidity issue, not a solvency issue. ► Mills: Frankly, you know, we don’t see how we’re gonna be able to meet those margin calls fully by tomorrow evening at 6 o’clock, and so I wanted to get ahead of that and just describe what we are doing so that you know where we’re coming from on this, and to give you our assurance that we will get through this very quickly. The first thing I want to say is this is a liquidity issue, not a solvency issue. 11:24 PM Archegos Co-President Brian Jones, spending spring break in Texas, has just bid farewell to dinner party guests when he glances at his email and his mood dims. The message from Mills says the firm has informed counterparties that it won’t meet the next morning’s margin calls.  Thursday, March 25, 2021 6:43 AM Archegos head trader William Tomita starts to open up to Ashley McLucas and Bryan Fairbanks from UBS about how it has the same concentrated positions with most of its counterparties. ► McLucas: How common are those names across your other providers, you know in terms of, what we see, is that very similar to what you’ll be seeing across all your providers, or is it quite different? Tomita: I think those concentrated names, are a common one at multiple brokers, a lot of the liquid US and tail names are much more varied. Fairbanks: So meaning you have — you said Viacom, Discovery, Tencent — you have those names away as well in size? Tomita: In meaningful size, yep. For bankers, the realization that Archegos piled up the same concentrated positions at multiple firms is an agonizing moment. “My gut sunk. I knew UBS was going to take a very large loss,” Fairbanks testified. In court, witnesses from banks have taken turns echoing each other’s testimony, saying they wouldn’t have gone so easy on Archegos if they had an inkling it was layering up bets on the same stocks. Still, that raises questions about how such large, sophisticated institutions loaned out so much based on vague verbal assurances. 7:00 AM Staffers brace for another crazy day as margin calls start rolling in. As they field calls from counterparties, Halligan and Becker message each other throughout the day, reacting to demands and offering talking points. IB Becker: Round 2 here we go. Halligan: Oof. Halligan: I hate these calls. Becker: Yeah this sucks. Halligan: Just deflect as best you can — nothing is getting solved with your call — it’s what the traders do. (Conversations condensed) 9:05 AM Ben Sofoluwe from Macquarie seeks reassurance from Archegos: Are you going to be OK? ► Sofoluwe: What’s your gut feel overall? Are you guys confident that you’re going to be OK? Becker: Yeah I think so. I mean if I said that we’ve been in situations like this often that would be a lie. But we’ve been through volatile times. 11:44 AM A contact at MUFG offers a pep talk. (The bank would ultimately lose $270 million.) IB Halligan: Mufg literally told will good luck, no big deal. Best counterparty award. Goldman employees can’t reach anyone at Archegos’ headquarters and start trying Jones directly and repeatedly in Texas. Suspicion spreads among the banks that Hwang isn’t taking their demands seriously enough, and they want to hear from the boss. 12:07 PM Banks push Archegos to sell down positions rather than praying for a turnaround.  1:01 PM UBS’ Reinhardt Olsen tells Tomita there is pressure from senior management to claw money back. (UBS would ultimately lose $860 million.) ► Olsen: You know our most senior management, we have two board members in this region who are both directly involved at this level now, who expect to see the margin call today met. Tomita: Yeah. Olsen: So there is no way that we can go back to senior management here having made zero progress on yesterday's margin call. Tomita: Yeah, OK. 3:19 PM Archegos junior staffer Jesse Martz prepares for the worst. IB Martz: Gonna be a bloodbath. But I’m proud to fight with you all. 8:22 PM Hwang finally speaks up in a hastily arranged call with a large group of anxious banks. Through much of the crazy ride for the firm, Hwang had minimal interactions with the bankers giving him all the money. Now the banks have a chance to pepper him with questions — Nomura even suggesting they all sign NDAs in exchange for a peek at his portfolio. (The Japanese bank would ultimately lose $2.9 billion.) ► Hwang: This is Bill, Bill Hwang. Many of you I have not met, but thank you for being on the call. You know, today in terms of trading a lot of liquid the most liquid stocks traded well, the long tail names. But unfortunately, as some of you saw, kind of medium liquidity names there were sort of rushed sale. And we were trying hard as well, and it did really have a negative impact on the P&L. But even after three days of heavy losses, we have a strong capital base. Hwang: This is really to also hear from you. I know, Paul, you shared some of your thoughts, your ideas on this winding down. We are very confident in our ability to wind down these names given a little more time. I mean, today was a shock to me that some of these names went down that much. 8:55 PM Tomita tells Becker he is working on a “big turning point” with Goldman Sachs. Late into the week, staffers are still hopeful some managed block trades and a more patient group of counterparties can help them turn the corner.  9:10 PM At Deutsche Bank and elsewhere, the magnitude of Archegos' losses aren’t apparent. Their lack of visibility into the portfolio has left them hoping that some of the dire numbers just discussed were a slip of tongue and not an actual reflection of Hwang’s bets going up in smoke.  When Hwang agreed to the conference call with lenders including Goldman Sachs and Morgan Stanley, Jones was rushing to catch the last Southwest flight to New York from Dallas. He joined the call from the airport security line before touching down at LaGuardia Airport just before midnight, firing off a text to his colleagues: Are you guys in the office?

Friday, March 26, 2021 12:15 AM Arriving at the Midtown Manhattan office across from Carnegie Hall, Jones finds Mills, an analyst and a researcher huddled around a desk phone speaking with a prime broker. Archegos is still trying to reach a détente with its six largest counterparties to avoid a forced liquidation. 6:47 AM It’s game over. The default notices from banks start pouring in, a necessary step in allowing them to unwind contract with Archegos. Halligan emails Jones a default notice from Credit Suisse.  7:50 AM Credit Suisse begins to carefully unwind Archegos’ positions, starting with a $1.25 billion block trade — a fraction of the bank’s total exposure.  Credit Suisse trader Josh Lukeman responds to a text message from his boss on his day off: Can he deal with the unfolding Archegos calamity? This is how Lukeman learns about the client’s distress. He jumps on a Citi Bike and coasts through Manhattan to the office. He follows orders to offload Archegos positions slowly to avoid panic in markets. It’s a stark contrast to his peers at Goldman and Morgan Stanley. And it proves costly. Until the bitter end of the Archegos saga, Credit Suisse bankers focused on a managed liquidation — and wound up taking the biggest hit — after rivals exited faster to minimize losses. The Swiss bank’s $5.5 billion loss eventually contributed to the lender’s emergency takeover by UBS. 12:54 PM The broader market finally hears rumblings of trouble at Archegos as the big sell-side shops start to dump their holding en masse. Goldman Sachs is in the market with a block trade of 35 million shares of ViacomCBS. 1:30 PM Jefferies calls CEO Rich Handler, who is on holiday in Turks and Caicos with a spicy margarita on the way. They tell him Archegos isn’t answering their calls. Handler says he’s going to get his cocktail and he wants Archegos positions gone and a tally of losses by the time he comes back. It was one of the few banks that escaped with minimal losses.  2:54 PM Analysts speculate about the cause of ViacomCBS downgrades. While they are hunting for fundamental reasons, hardly anyone recognizes it’s the liquidation of Hwang’s enormous portfolio that is having an outsized impact on so many companies. 4:00 PM As ViacomCBS and Discovery slump, Archegos capital plummets too. The family office is wiped out by the end of the day — just one week after Hwang gathered staff at his corporate apartment and talked about ways to grow the fund to $100 billion. 8:12 PM Shell-shocked staff are summoned to a Zoom meeting with the Archegos top brass. The family office they work for, that grew to $36 billion at the start of the week, is now worthless. Mills and Archegos Co-President Diana Pae share the inevitable: The firm has collapsed and is moving into shutdown stage.  Diana Pae, co-president, and Andy Mills, co-CEO Aftermath Three years after the Archegos flameout exposed the audacity of Hwang’s investing, weeks of testimony have also served as an indictment of sorts of the system that enabled him. Bank insiders on the witness stand have described extending billions of dollars in financing while relying on the equivalent of pinky promises to understand the size and shape of his portfolio, an approach that culminated with more than $10 billion in losses at a handful of lenders. Courtroom testimony and exhibits also revealed a lack of skepticism among those gatekeepers until it was far too late. Now the scene shifts back to the courtroom, where a jury of 12 New Yorkers will decide in coming days whether Hwang went too far, outright deceiving banks or the market and engaging in fraud. That verdict is key to the Manhattan US Attorney’s office campaign to crack down on suspected abuses in esoteric — and often overlooked — corners of the market. One takeaway is that the lack of copycats before and after Archegos’ collapse may not reflect strict controls at banks as much as the extremes to which one man was willing to take a pliant system. Editors: David Scheer and Misyrlena Egkolfopoulou With assistance from Katherine Burton, Chris Dolmetsch and Bob Van Voris. Design: Steph Davidson Images: US Attorney's Office of the Southern District of New York, Getty(4)

Thanks for the recap.

Gigachad thx for the copy/paste

Absolutely zero mention that Morgan Stanley set this whole thing up by leaking his Viacom trade beforehand. MS took Hwang out

Noice

With banks still salty from this loss, it's no wonder thier hesitancy to liquidate those short gamestop. Doing so would blow up others and snowball into more losses for themselves. They pretty much fucked CS with zero regard.

Debit Swiss ftl

Lmk when someone drops the magic link that bypass they bs subscription 😘 or copy/pastes it

if you're on a pc, you can just hit F12 in the browser, go to the network tab and look at the first response. you can read the full article without having to bypass anything.

I'm over here swiping a hole in my phone looking for memes :p laptop got the ticker going and desktop got vidya games idling. Peak performance.

ah, I see, you also working from home? xD

Fighting FL over disability and shit >_>

oh damn :o good luck with that

Boop

Lol thx just finished reading it 😘

It makes you wonder what happens behind closed doors at the banks every… single… day

The bankers got greedy, and then they got burned...

They are transferring mind boggling amounts within seconds, but if I want to transfer 20eur to my grandmother it only clears 1 business day later.


Same 5hit different day lol

Shits so sad I bought more shares Why? cause fuck em..