Report on Archegos Capital Management (How Credit Suisse Lost $6B)(sec.gov)
sec.gov
Report on Archegos Capital Management (How Credit Suisse Lost $6B)
https://www.sec.gov/Archives/edgar/data/0001159510/000137036821000064/a210729-ex992.htm
9 comments
Too bad the contract wasn’t controlled by some kind of algorithm, a ‘smart contract’, if you will. Oh well, guess we’ll just never have a solution for this sort of thing.
Most of these are intentional planned exploits carried out by outsourced creators that insert bugs. It’s a good point, but probably more preventable than observed.
This wasn't a failure of enforcing a contract.
It was a failure of employees of Credit Suisse to take action after (correctly) identifying risks in their Archegos deal.
Multiple departments at CS saw the risk.
They failed to take action because they didn't want to loose a client who was paying them money.
It was a failure of employees of Credit Suisse to take action after (correctly) identifying risks in their Archegos deal.
Multiple departments at CS saw the risk.
They failed to take action because they didn't want to loose a client who was paying them money.
I'm all about cryptocoins but wow this is just about the glass-est house to throw stones from. Smart Contracts are notorious for things going wrong. I'm no expert but I kinda doubt a smart contract could make an autonomous margin call. Can't know the value of collateral without trusting a human or two in there somewhere.
Amazing report. Some notes
1. Report is written by an internal committee of Credit Suisse
2. Archegos started as Tiger Asia, got caught doing insider trading, settled with US SEC in 2012. Then re-branded itself as Archegos, operating from Hong Kong focussing on Asian securities. Hong Kong later banned it from operating for four years. This lead to Archegos trading in US, with Asian ADRs (basically Asian securities, converted to US securities equivalent assets)
3. CS basically ignored all the risk factors associated with Tiger Asia / Archegos and continued providing them services.
Looks like they backed a bad player with bad reputation that was sometimes profitable and it came back to bite its behind.
1. Report is written by an internal committee of Credit Suisse
2. Archegos started as Tiger Asia, got caught doing insider trading, settled with US SEC in 2012. Then re-branded itself as Archegos, operating from Hong Kong focussing on Asian securities. Hong Kong later banned it from operating for four years. This lead to Archegos trading in US, with Asian ADRs (basically Asian securities, converted to US securities equivalent assets)
3. CS basically ignored all the risk factors associated with Tiger Asia / Archegos and continued providing them services.
Looks like they backed a bad player with bad reputation that was sometimes profitable and it came back to bite its behind.
Remarkable. I read things like this and can't help but come away thinking either:
1) Big banks are run by idiots or,
2) Big banks are greedy and it blinds them to the obvious or,
3) Big banks cover their asses after the fact with fanciful tales of miscommunication, we were deceived!, etc.
1) Big banks are run by idiots or,
2) Big banks are greedy and it blinds them to the obvious or,
3) Big banks cover their asses after the fact with fanciful tales of miscommunication, we were deceived!, etc.