Michael Dell Pledges $6.25 Billion to Boost Children’s Investment Accounts Under Trump Initiative 
Tunisian Opposition Figure Chaima Issa Arrested Amid Rising Crackdown 
Bristol Myers Faces $6.7 Billion Lawsuit After Judge Allows Key Shareholder Claims to Proceed 
Union Urges Court to Compel Trump Administration to Restore CFPB Funding 
UN General Assembly Demands Russia Return Ukrainian Children Amid Ongoing Conflict 
Northwestern University to Restore Research Funding Under $75 Million Agreement with U.S. Government 
Visa to Move European Headquarters to London’s Canary Wharf 
USPS Expands Electric Vehicle Fleet as Nationwide Transition Accelerates 
Bolsonaro Detained Over Alleged Escape Risk After Ankle Monitor Tampering 
Trump Pardons Former Honduran President Juan Orlando Hernández in Controversial Move 
Federal Judge Blocks Trump Administration’s Medicaid Funding Restrictions Targeting Planned Parenthood 
Brazil’s Supreme Court Orders Jair Bolsonaro to Begin 27-Year Prison Term 
CFPB Reaches $1.75 Million Settlement with MoneyLion Over Military Loan Overcharges 
Netflix Nearing Major Deal to Acquire Warner Bros Discovery Assets 
Hikvision Challenges FCC Rule Tightening Restrictions on Chinese Telecom Equipment 
Appeals Court Blocks Expansion of Fast-Track Deportations in the U.S. 
Proxy Advisors Urge Vote Against ANZ’s Executive Pay Report Amid Scandal Fallout 
A US judge on Thursday ended investor litigation against two banking giants, Goldman Sachs Group Inc and Morgan Stanley. The lawsuits accused them of market manipulation and insider trading, which allegedly contributed to the swift downfall of Bill Hwang's Archegos Capital Management in March 2021.
Unprecedented Financial Meltdown
Reuters noted that Archegos Capital, once valued at a colossal $36 billion, was mired down by Hwang's massive leverage through financial instruments like total return swaps. These contracts allowed him to amass an enormous position in various stocks, notably ViacomCBS, Discovery, and Baidu. This strategy inflated the firm's exposure to an estimated $160 billion worth of stocks.
According to US News, investors claimed that insider information gave Goldman Sachs and Morgan Stanley an unfair advantage, allowing them to sell their stocks and avoid the extreme losses that Archegos suffered due to failing to meet margin calls. The legal battle was to hold the banks accountable for the damages sustained by investors who were caught in the wildfires of this financial collapse.
The Judicial Verdict
US District Judge Jed Rakoff's decision to dismiss the claims with prejudice stops further pursuing these allegations in court. The justification for his ruling will be disclosed in a subsequent opinion.
Responses to these developments have been tepid, with lawyers for the investors unavailable for comment and Morgan Stanley opting for silence. Goldman Sachs has also withheld immediate reaction.
Broader Impact on the Banking Sector
This event sent shockwaves through the industry, causing significant losses for other banking institutions like Credit Suisse, which later merged with its Swiss counterpart UBS and Japan's Nomura Holdings.
What Lies Ahead for Archegos Executives
Looking ahead, Hwang and Archegos' former CFO Patrick Halligan face a criminal trial set for May 8 in Manhattan. They have both entered pleas of not guilty to various charges, including securities fraud, and a lengthy trial process is anticipated.
Photo: Goldman Sachs Newsroom
