Citigroup Faces Lawsuit Over Alleged Sexual Harassment by Top Wealth Executive 
Panama Supreme Court Voids Hong Kong Firm’s Panama Canal Port Contracts Over Constitutional Violations 
Global PC Makers Eye Chinese Memory Chip Suppliers Amid Ongoing Supply Crunch 
Federal Judge Blocks Trump Administration Move to End TPS for Haitian Immigrants 
Trump Family Files $10 Billion Lawsuit Over IRS Tax Disclosure 
Nvidia CEO Jensen Huang Says AI Investment Boom Is Just Beginning as NVDA Shares Surge 
SpaceX Prioritizes Moon Mission Before Mars as Starship Development Accelerates 
New York Judge Orders Redrawing of GOP-Held Congressional District 
Amazon Stock Rebounds After Earnings as $200B Capex Plan Sparks AI Spending Debate 
Minnesota Judge Rejects Bid to Halt Trump Immigration Enforcement in Minneapolis 
Ford and Geely Explore Strategic Manufacturing Partnership in Europe 
American Airlines CEO to Meet Pilots Union Amid Storm Response and Financial Concerns 
Washington Post Publisher Will Lewis Steps Down After Layoffs 
Trump Administration Sued Over Suspension of Critical Hudson River Tunnel Funding 
Baidu Approves $5 Billion Share Buyback and Plans First-Ever Dividend in 2026 
Supreme Court Tests Federal Reserve Independence Amid Trump’s Bid to Fire Lisa Cook 
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
