A former managing director at Archegos Capital Management LP has sued the private investment firm and its indicted founder Bill Hwang, claiming a loss of tens of millions of dollars when the firm collapsed, causing huge losses for banks, Reuters reported. In a complaint filed yesterday in Manhattan federal court, Brendan Sullivan said that he was defrauded out of as much as $50 million after Archegos required him and colleagues to put at least 25% of their bonuses in its deferred compensation plan. Sullivan said that the plan lost $500 million when the firm collapsed in March 2021, despite Archegos' promise that money would be safely invested only in highly liquid stocks. He said that participation was effectively coerced by requiring employees to decide how much to defer before Hwang awarded bonuses. Archegos once had $36 billion of assets. It imploded when it was caught short after making huge bets on stocks including ViacomCBS through securities known as total return swaps. The resulting fire sale in stocks caused about $10 billion of losses for banks, primarily Credit Suisse Group AG and Nomura Holdings Inc. "The message was crystal clear. No contribution. No bonus," said Sullivan, a specialist in technology and media companies.
