“The significant loss in our Prime Services business relating to the failure of a US-based hedge fund is unacceptable,” Thomas Gottstein, chief executive of Credit Suisse Group, said in a statement.
The bank’s board of directors is launching an investigation into the matter, and Credit Suisse’s top investment banker and chief risk officer will be departing, Credit Suisse said Tuesday. It also plans to cut its dividend, halt share buybacks and hold off on bonuses for some executives while it attempts to recover its losses.
The implosion of New York-based Archegos is one of the largest collapses of a hedge fund since the 2008 financial crisis, sparking calls for tighter oversight of Wall Street from lawmakers including Democratic Sens. Sherrod Brown of Ohio and Elizabeth Warren of Massachusetts. It’s also drawn scrutiny of what critics describe as a lack of transparency tied to some trading contracts and to family offices, the private investment vehicles of wealthy individuals.
Here’s how the major Swiss lender got caught up in the risky bets of Archegos Capital.
What to know
- What is Archegos Capital?
- Who is Hwang?
- Why was Archegos’s investment strategy potentially risky?
- Who got hurt, and how big are the losses?
- What happens next?