How one man's massive margin call triggered a multi-billion dollar banking disaster
Bill Hwang, a former hedge fund manager, leveraged his family office, Archegos Capital, to borrow billions from major global banks. When his concentrated bets on stocks like ViacomCBS soured, the resulting margin calls forced a fire sale that wiped out tens of billions in market value.
Bill Hwang, a veteran of Julian Robertson’s Tiger Management, previously faced regulatory trouble in 2012, including a trading ban in Hong Kong and multi-million dollar fines in the US for illegal trading. Despite this history, he secured massive credit lines from top-tier institutions such as Goldman Sachs, Morgan Stanley, Credit Suisse, and Nomura.
The collapse began when Hwang’s highly leveraged positions in US and Chinese stocks faltered. When banks issued margin calls, the subsequent uncoordinated liquidation of his portfolio erased $33 billion in market value in a single day. Total share sales by his counterparties have exceeded $30 billion, exposing the systemic risks of excessive leverage and the failure of banks to effectively coordinate their exit strategies.
