Goldman, Morgan Stanley To Face Lawsuit Over Archegos Collapse

• Goldman Sachs and Morgan Stanley facing lawsuit over Archegos collapse.

• Archegos Capital Management's implosion caused significant losses in the financial industry.

• Bill Hwang's family office faced margin calls leading to a fire sale of positions.

The logo for Goldman Sachs is seen on the trading floor at the New York Stock Exchange (NYSE) in New York City

Reuters

Goldman Sachs and Morgan Stanley are set to face a lawsuit from investors in relation to the collapse of Archegos Capital Management. The lawsuit stems from the fallout of Archegos' implosion earlier this year, which sent shockwaves through the financial industry.

Archegos Capital Management, a family office run by Bill Hwang, faced significant margin calls in March 2021, leading to a fire sale of its positions. This fire sale resulted in billions of dollars in losses for banks and other financial institutions that had exposure to Archegos.

Investors have now taken legal action against Goldman Sachs and Morgan Stanley, alleging that the two banks failed to properly manage the risks associated with their dealings with Archegos. The lawsuit claims that the banks were aware of the risks posed by Archegos but continued to provide financing and services without adequate safeguards in place.

The fallout from the Archegos collapse has raised concerns about the lack of transparency and oversight in the family office sector. Regulators and financial institutions are now facing increased scrutiny over their risk management practices and the potential systemic risks posed by large family offices.

Goldman Sachs and Morgan Stanley have yet to publicly comment on the lawsuit. The legal proceedings are expected to shed light on the events leading up to the Archegos collapse and could have broader implications for the financial industry as a whole.