Turmoil at Archegos Capital Management, the investment firm of former hedge fund manager Bill Hwang, is rattling financial markets around the globe. Shares in some of the world’s largest banks plunged in Monday trading: Both Nomura Holdings Inc. and Credit Suisse Group AG fell more than 14% and said they may face significant losses because of their exposure to wrong-way bets by Archegos, following the forced liquidation of over $20 billion in positions linked to the New York-based family office. U. S. stocks retreated from all-time highs as traders weighed the level of contagion. As New York trading opened, Goldman Sachs Group Inc. and Morgan Stanley fell. ViacomCBS edged lower while Discovery Inc. rose. While investors try to gauge the outlook, here are details we know about what happened:Investment banks including Goldman Sachs and Morgan Stanley were said to have sold a series of huge chunks of shares. These sales are known as block trades and are relatively commonplace in markets. Typically, a deal is negotiated privately and transacts when the markets are closed. What was abnormal about the trades Friday was their size — some of the chunks exceeded $1 billion according to Bloomberg calculations — and the fact that several of them hit during normal trading hours. Sizeable block trades — especially those done at a discount to the market price — are always unnerving for investors, especially when the seller isn’t clear. Put simply, the fear is that someone else somewhere knows something bad that you don’t. That’s why shares in Chinese tech giants such as Baidu Inc. and Alibaba Group Holding Ltd. fell sharply in the Asian morning as traders tried to get out in front of whatever was going on. Alibaba later recovered after Wall Street realized the mayhem was driven by specific rather than sector-wide sales. Archegos Capital Management, the family office of trader Bill Hwang, was behind the unprecedented selling, Bloomberg reported. Hwang has had a long and controversial career. A protege of Tiger Management hedge-fund legend Julian Robertson, the so-called tiger cub struck out on his own and built Tiger Asia Management in New York partly with money from his former boss. Hwang's multi-billion dollar Asia-focused hedge fund produced stellar returns. Then in 2012, he pleaded guilty to insider trading on some Chinese bank stocks and agreed to criminal and civil settlements of more than $60 million, later closing down the fund. That didn’t mean he stopped investing, though. Instead, Hwang focused on managing his own money out of a family office — Archegos — which grew to be bigger than many better known hedge funds. Such set-ups that manage money for wealthy families don’t usually have outside investors, meaning they are free to take bigger risks and are often under less regulatory scrutiny. In this case, Bloomberg reported that Archegos had used derivatives contracts with brokers — known as swaps — to gain substantial additional leverage.


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