The Real Question is...

Absolutely not, said the DOJ, which arrested the top two executives at Archegos Capital Management yesterday – founder Bill Hwang and CFO Patrick Halligan – and charged them with securities fraud, wire fraud, and racketeering. Both are alleged to have overseen the fund's multi-billion dollar rise and subsequent collapse.

💰 A deeper dive...

• Federal prosecutors accused Hwang of using Archegos’ portfolio to manipulate the stock prices of a handful of companies to grow the firm from $1.5 billion in holdings to $35 billion in a single year; both men pleaded not guilty, claiming they're innocent of any wrongdoing.
• Hwang allegedly used derivative securities with no public disclosure requirements, hiding the size of Archegos’ positions and leaving investors unaware that the firm was dominating the trading of a select few companies like ViacomCBS and Discovery.
• Archegos collapsed in March 2021 when the price of those stocks declined, leaving banks like Credit Suisse and Morgan Stanley with more than $10 billion in losses and erasing more than $100 billion in stock market value in a matter of days.

📸 The big picture: In addition to federal criminal charges, the SEC also filed a civil lawsuit that names Hwang and Halligan as defendants along with William Tomita, Archegos’ head trader, and Scott Becker, its chief risk officer, both of whom have already pleaded guilty.