He inquired about how the bank’s family office clients are onboarded and how often periodic reviews of family offices are undertaken.Īnd he pressed Credit Suisse to explain its role in Archegos’s margin call on ViacomCBS stock, as well as its “participation in, or consideration of, any coordination with other banks to sell, or to refrain from selling, stocks related to Archegos transactions.”įederal banking regulators are likely to be asking similar questions as the dust settles. The qualifications of persons operating family offices should be no less than for persons operating other exempt and non-exempt pools.”īrown asked Credit Suisse about its know your customer (KYC) processes and how those were applied to Archegos and Hwang about the bank’s evaluation of family offices for services, particularly for extension of credit and about “how collateral, including initial margin and variation margin, is maintained for transactions with those clients.” In order to do this the Commission should have basic information about family offices that are operating commodity pools. “To protect the integrity of the commodity markets, the must be aware of and able to monitor the activities of large family offices. “I am troubled, but not surprised, by the news reports that Archegos entered into risky derivatives transactions facilitated by major investment banks, resulting in panicked selling of stocks worth tens of billions of dollars and those banks collectively losing nearly $10 billion,” wrote Brown.
#RANSOMWARE SUMMIT EYES TIGHTER SCRUTINY SERIES#
Sherrod Brown (D-Ohio), released a letter Thursday in which he posed a series of questions to Credit Suisse regarding its role in the Archegos meltdown. The head of the Senate Banking Committee, Sen. “I think they’ll be asking, ‘Why was he able to get so much money?’” Cipperman said of Hwang. Todd Cipperman, managing partner of Cipperman Compliance Services and former general counsel for a mutual fund firm, said banking regulators are sure to scrutinize what happened at Archegos. In the aftermath, the bank launched an investigation and fired its chief risk and compliance officer. The massive stock sell-off that followed caused billions in losses for some of Archegos’s largest lenders, most prominently Credit Suisse, which reported it lost $4.7 billion. When ViacomCBS lost nearly half its value, Archegos’s risky bets backfired. The firm had taken highly leveraged positions in several blue-chip stocks, including ViacomCBS. Archegos is a hedge fund operated by billionaire Bill Hwang that reportedly lost $8 billion in less than two weeks in March.
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