The U.S. Securities and Exchange Commission opened a preliminary investigation into Bill Hwang over his leveraged trades that have roiled Wall Street, Bloomberg News reported. The SEC started the civil probe in recent days after Hwang’s Archegos Capital Management made a series of wrong-way wagers that prompted brokers to liquidate his positions, said a person familiar with the matter, who asked not to be named because the inquiry isn’t public. The examination is in its early stages and is being led by the asset-management group in the SEC’s enforcement division. It’s fairly routine after a major market blowup for the SEC to launch a review. The probe may not lead to any allegations of wrongdoing. After some positions moved against him last week, Hwang was forced to put up more collateral. He ultimately faced margin calls that he couldn’t meet, prompting banks including Goldman Sachs Group Inc. to unwind his positions through a series of block trades. That sent shares of companies including ViacomCBS Inc., Baidu Inc. and Tencent Music Entertainment tumbling. Credit Suisse Group AG and Nomura Holdings Inc., which served as brokers for Hwang’s wagers and lent him huge sums of money, are now warning shareholders that they face “significant” losses. Goldman was ahead of the pack in cutting exposure and expects any impact on its financial results to be immaterial.
