Report on Archegos Capital Management (How Credit Suisse Lost $6B)
sec.gov
sec.gov
1. Report is written by an internal committee of Credit Suisse
2. Archegos started as Tiger Asia, got caught doing insider trading, settled with US SEC in 2012. Then re-branded itself as Archegos, operating from Hong Kong focussing on Asian securities. Hong Kong later banned it from operating for four years. This lead to Archegos trading in US, with Asian ADRs (basically Asian securities, converted to US securities equivalent assets)
3. CS basically ignored all the risk factors associated with Tiger Asia / Archegos and continued providing them services.
Looks like they backed a bad player with bad reputation that was sometimes profitable and it came back to bite its behind.
1) Big banks are run by idiots or,
2) Big banks are greedy and it blinds them to the obvious or,
3) Big banks cover their asses after the fact with fanciful tales of miscommunication, we were deceived!, etc.
My wife has worked in the banking industry for years, in my experience of what she's told me it's all of the above.
It was a failure of employees of Credit Suisse to take action after (correctly) identifying risks in their Archegos deal.
Multiple departments at CS saw the risk.
They failed to take action because they didn't want to loose a client who was paying them money.