Credit Suisse Group AG lost billions of dollars with the collapse of Archegos Capital Management in 2021. The firm is trying to help the U.S Justice Department build a case regarding block trading against Goldman Sachs Inc, and Morgan Stanley.
According to anonymous sources, the Swiss firm is going beyond a bank’s routine cooperation to provide information and assistance to build the case. Representatives of Credit Suisse delivered a presentation to the U.S Attorney Office of New York last week, and presented potential issues with the collapse of Archegos in March.
The collapse of Will Hwang’s family office hurt a lot of banks, and Credit Suisse was at the top of the list with more than $5 million in losses, which affected its foundation and leadership. The firm’s assistance to the authorities regarding the other bank’s actions can help give it a legal edge to recoup some of their losses or to head off regulatory sanctions.
Representatives at Credit Suisse, Goldman Sachs, Morgan Stanley, and the Justice Department declined to comment.
Archego made use of bank’s brokerage to place bets on stocks that rose, and gained profits that allowed it to wager more. Once prices began to drop, the firm went under pressure.
In 2021, Bloomberg reported that Credit Suisse faced significant exposure when they were faced with agreement to hold on on exposing their portfolio. However it failed when Credit Suisse was caught in the cross-fires when Goldman Sachs and Morgan Stanley extinguished their exposures, which led to price declines that hurt other banks left behind.
Credit Suisse has been struggling to move past a difficult year, which saw the destruction of its primary relationship with Greens Capital and Archegos. The leaders at the bank said that they rolled out a strategic shift in November, but it might not show signs of success until 2023.
