American Consequences - April 2021


Management. Archegos in Greek means “the one who leads the way.” Well, to financial slaughter, perhaps. Like a freshly released convict casing his next heist, Hwang went to work on speculative, overleveraged (20-to-1) investing bets applying sketchy tactics as total return swaps – where you’re rewarded returns for an asset without actually owning it. Any time you hear “swap” in a Wall Street saga, you know there’s a crime scene nearby. Hwang targeted ViacomCBS, Discovery, and Baidu (China’s Google), amassing his wealth in the shadows. He kept quadrupling down on his leveraged bets, like a narcoleptic Vegas gambler who keeps throwing chips on the blackjack table, even though he, the dealer, and the casino are all on fire. But when ViacomCBS announced $3 billion in new shares, the market called his bluff. As Hwang’s brokers got wise to Archegos’ cash-strapped reality, Morgan Stanley, Goldman Sachs, and Credit Suisse dropped him faster than Gaetz with a woman his own age. And just like that, $20 billion – gone. In the 1974 classic movie, Chinatown (directed by honorary Dunce Hall of Famer, Roman Polanski), Jack Nicholson asks John Huston’s maniacal tycoon how much more money he needs. What else can he possibly buy? He replies with: “The Future.” But for the Bill Hwangs of the world, all they need to do is to look into the past… And there they’ll find all the answers, completely free of charge.

Hell, it makes you a star. Gaetz has since denied the charges with a surreal third- person defense (“Matt Gaetz would never...”), and it’s come to light that he pleaded for a preemptive presidential pardon in the waning months of the Trump White House. Because you know, it’s nice to have one in your back pocket – just in case... Or if you’ve caught wind that you’re part of a federal sex crime investigation. What will happen next for Gaetz? What new salacious, predatory, squirm-inducing details will fill our feeds and nightmares? And what righteous repercussions will befall him? Well, since it’s Washington, the same thing will happen that always happens: nothing. Or reelection.


The thing about dunces is, the moment you hear about their splash into idiocy, it’s never their first time. They’ve been dunce- ing it up for a while before they’re ever trending on Twitter. In 2012, Bill Hwang’s hedge fund shorted the shares of three Chinese

banks based on – you guessed it – inside information. Along with charges of market manipulation, Hwang pled guilty and paid more than $40 million in fines. But just as Gaetz’s early indiscretions made him more qualified for politics, the SEC-slapped Hwang was ready for the Wall Street spotlight. Cue his hedge fund Archegos Capital


April 2021

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