Bank collusion probe in Archegos meltdown closes without charges
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THE US Justice Department has closed a criminal antitrust probe into whether banks illegally coordinated their responses to the unraveling of Bill Hwang’s family office Archegos without bringing charges, according to people familiar with the matter, ending a years-long chapter of government scrutiny into an implosion that rocked Wall Street.
People involved in the probe were notified earlier this year that the investigation, which began in 2021, was being closed by prosecutors, said some of the people, who asked not to be identified discussing a confidential decision.
Authorities examined whether talks among Archegos’ trading partners about how to unwind more than US$150 billion in bets placed by his office amounted to collusion or a conspiracy to collude to control prices.
Some in finance bristled at the investigation as an overreach because it could have relied on a 19th century law commonly associated with crackdowns on monopolists to prosecute lenders discussing how to minimise losses.
The probe also threatened legal trouble for banks that suffered US$10 billion in losses and were framed as victims in Hwang’s separate criminal trial for market manipulation and fraud. He was convicted in 2024.
It wasn’t immediately clear why the Justice Department had ended the probe, but the case was bumping up against a deadline for any charges to be filed. There is a five-year statute of limitations for criminal antitrust charges, and the conduct at issue took place around March 2021.
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The Justice Department declined to comment.
Before Archegos melted down in 2021, Hwang borrowed money from banks to layer up bets on a small group of stocks, such as ViacomCBS, sending prices soaring.
Lenders realised too late that Archegos had fueled the run-up by buying swaps from several firms. Once prices started slipping, Hwang and the counterparties faced a downward spiral of losses and liquidations.
After holding emergency talks in March 2021, banks including Credit Suisse, Nomura Holdings Inc. and UBS Group AG reached a managed liquidation agreement to sell down parts of their Archegos exposure.
Others like Goldman Sachs Group, Morgan Stanley and Deutsche Bank AG explored such an agreement before deciding against it. Credit Suisse, which was acquired by UBS after it collapsed in 2023, ended up with the lion’s share of the losses — US$5.5 billion.
The banks either declined to comment or didn’t immediately respond to a request for comment.
After Hwang’s 2024 conviction, antitrust prosecutors in the San Francisco office kicked off fresh inquiries into the banks’ conduct, Bloomberg News has reported.
Representatives for some of those swept up in the probe had argued privately to prosecutors that they’d relied on the involvement of lawyers when they were debating proposals to coordinate an orderly liquidation that would minimise market disruptions, said one of the people familiar with the matter. BLOOMBERG
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