Archegos Capital / Credit Suisse / Nomura
Archegos Capital Management Collapse
Estimated impact: $10B+ across prime brokers; Credit Suisse $5.5B
Bill Hwang's family office used total return swaps to build $100B+ in concentrated positions with 5x-8x leverage. When ViacomCBS stock dropped, margin calls triggered forced liquidation causing $10B+ in prime broker losses.
Decision context
Multiple prime brokers (Credit Suisse, Nomura, Goldman, Morgan Stanley) each extended leverage without visibility into Archegos's total exposure across counterparties. Risk managers at Credit Suisse flagged concerns but were overridden by relationship managers protecting revenue.
Decision anatomy
Red = risk factor present · Green = protective factor present
The analysis below was produced from the pre-decision document only. No hindsight. This is what the platform would have surfaced if it had been running in 2021-03-26.
“Archegos Capital Management (Bill Hwang family office) built concentrated positions in ViacomCBS, Discovery, Baidu, Tencent Music, and GSX Techedu using total return swaps across Credit Suisse, Nomura, Goldman Sachs, Morgan Stanley, UBS, and MUFG. Each prime broker saw only its own slice of the exposure (typically 5-8x leverage). Aggregate leverage exceeded 20x. When ViacomCBS announced a $3B secondary offering on March 22 2021, the stock fell 50% in a week — triggering margin calls that exceeded Archegos's capacity. Goldman and Morgan Stanley exited positions first; Credit Suisse and Nomura, late to unwind, took the largest losses.”
Source: Credit Suisse Special Committee Report on Archegos (Paul, Weiss, July 2021); SEC Complaint v. Hwang & Halligan (2022)
Red flags detectable at decision time
- Total-return-swap structure obscures beneficial ownership — prime brokers could not see aggregate exposure
- Bill Hwang's prior Tiger Asia vehicle had SEC insider-trading settlement in 2012
- Five prime brokers each at 5-8x leverage — aggregate ~25x across the family office
- Concentrated positions in a handful of US-listed Chinese stocks and media names — zero diversification
- ViacomCBS $3B secondary offering announced while Archegos held 20%+ of free float via swaps
Cognitive biases the platform would have flagged
Hypothetical analysis
DI would flag Archegos as the canonical cross-counterparty opacity failure. Each prime broker independently underwrote its exposure as reasonable in isolation — a decision process that structurally cannot assess aggregate risk. A bias-adjusted framework would have required each prime broker to demand cross-broker exposure disclosure from family-office counterparties as a precondition for leverage. The bandwagon effect is explicit: later banks (Credit Suisse, Nomura) joined the relationship because earlier banks (Goldman, MS) had validated it — without independent verification.
Biases present in the decision
★ Primary driver · Severity estimated from bias type and decision outcome
Toxic combinations
Reference class base rates
Across all 143 curated case studies in our library:
Lessons learned
- Counterparty risk cannot be assessed without cross-broker visibility
- Revenue incentives must not override risk management escalation
- Total return swaps created opacity that existing regulatory frameworks did not address
Source: Credit Suisse Special Committee Report on Archegos, July 2021; SEC Complaint 2022 (SEC Filing)
We caught these patterns in Archegos Capital / Credit Suisse / Nomura's own record — before the outcome.
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Workflows that fire on decisions like Archegos Capital / Credit Suisse / Nomura’s
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