Lawyers with the Securities and Exchange Commission have served a subpoena on Archegos Capital Management, the $10 billion family investment office that suddenly collapsed in March, roiling the stock market as its losses reverberated through the banking industry, the New York Times reported. The issuance of a subpoena is not particularly surprising as lawyers from the SEC, the Manhattan U.S. attorney’s office and the Commodity Futures Trading Commission have been looking into the collapse of Archegos since its heavy bets on a small number of stocks rapidly unraveled seven months ago. Even so, the subpoena marks the transition to a formal investigation. Investigators are focusing mainly on whether Archegos’s founder, Bill Hwang, misled the banks through which he invested in sophisticated derivatives about the risk he was taking on at his firm. The SEC is also believed to be looking into whether Archegos violated any regulating rules that would have required the firm to disclose some of its hefty stock position. In appearances before Congress, Gary Gensler, the SEC’s chair, has said that the Archegos trading debacle revealed gaps in the regulatory requirements for investment firms and lightly-regulated family offices when it comes to disclosing big positions in derivatives.
