A little-known hedge fund caused widespread chaos on Wall Street

The names of the key players are different, but the lessons similar. The spectacular implosion of hedge fund Archegos Capital Management, much like the GameStop saga earlier this year, serves as a reminder of the dangers posed by extreme leverage, secret derivatives and rock-bottom interest rates.
ViacomCBS (VIACA), Discovery (DISCA) and other media titans' stocks crashed Friday as Wall Street banks that lent to Archegos forced the firm to unwind its bets. The epic firesale wiped out more than half of Viacom's value last week alone.
Major banks face billions of dollars in losses from their exposure to Archegos. Both Credit Suisse (CS) and Nomura tumbled Monday after warning of significant hits to their earnings.
The most startling part about the tale of Archegos is that it is a firm that few people had ever heard of before this weekend. And yet in this era of easy money, Archegos was able to borrow so much that its failure created shockwaves large enough to ripple across Wall Street — and impact everyday Americans' retirement accounts.

#FirstMove #CNNBusiness #News

[zacharycollins]

Hedge funds are free to commit chaos, but when a group of people on Reddit decide to buy some stock, Congress needs to investigate and try and shut down individual investors. #EatTheRich

[peterthinks]

Use other people's money as collateral to borrow millions from a bank. Then use that borrowed money as collateral to borrow hundreds of millions from another bank. Use those hundreds of millions to borrow billions from other banks. Then bet it all on five stocks. Epic!

[Bat_Boy]

If I ran a hedge fund, I would name it Sonic. Sonic the Hedge Fund. 😀

[westcoast]

And of course the right wingers will be calling for less regulations

[theesperanzacompromisebyja]

Archegos Capital Management defaulted on margin calls from global investment banks Credit Suisse, Nomura Holdings, Goldman Sachs and Morgan Stanley. Archegos CEO Bill Hwang got nailed for insider trading but somehow made a comeback.

[Godsbackhand]

Reddit/GameStop debacle? She says this as if letting those firms basically drive a company into the dirt and then riding the wave down is somehow “better” for anyone.

[jeffsaginaw]

This should all be outlawed - it's not investing, it's GAMBLING with other peoples money. Can't believe banks actually loan money to hedge funds to short stocks and it's legal? And when the market collapses everybody wants and some get a federal bailout. Thjis all just needs to be stopped.

[michaelulbricht]

It's time to crack down on people and places on Wall Street who skirt the rules. If nobody's punished, then their behavior will just get worse!

[mattt]

When the bankers gamble, the taxpayers lose.

[bradleyeric]

Don't panic! Only the little guys lost money.

[lexas]

Another 2008 is all the world needs right now.

[Utopiate]

Thank god the 1%ers were saved from the possible inconvenience.

[quantumonions]

They're pronouncing this fund like Are-keg-ohs, but I look at it and see Arch Egos, which probably more accurately describes the founders of this sweatshop.

[alberthernandez]

I DON'T CARE ABOUT THE STOCK MARKET

[sunnypsydup]

"still being tallied up, but the feeling is its contained." Literally contradicted yourself in the first few seconds lolol

[timothypulliam]

Just let the stock market crash already so we can all buy the dip

[anggasurbakti]

It shows bankers actually don't know what they are doing. Need some kind of license for someone to become one with 300+ hours courses and several layers of test.

[quantumonions]

I've gotta give these sell-side analcysts a tip of the hat for their eternal optimism. /s

[lovelovevon]

But they want to tell retail traders we need more financial education to trade. We don't need education to buy and hodl. They need to teach hedgies how to manage their funds, stop gambling with other people's money and selling shares they don't have.

[katiekat]

"...do we know how Archegos bypassed regulations in the US?..."

...wait ... the USA has regulations?

🤯