Archegos urges dismissal of two U.S. regulators’ lawsuits over collapse

Archegos Capital Management LP has urged a Manhattan federal judge to dismiss lawsuits by two U.S. regulators seeking fines and restitution over the private investment firm’s collapse, which saddled banks with about $10 billion of losses.

In a Friday court filing, Archegos said the Commodity Futures Trading Commission lacked authority to pursue claims that the firm lied to banks in order to borrow money more cheaply, and that only the Securities and Exchange Commission could sue over the financial instruments it used.

The CFTC did not immediately respond to a request for comment.

Archegos made its argument after on June 28 urging the dismissal of the SEC’s own lawsuit alleging market manipulation, saying that claim was based on market activities of the firm’s counterparties, not Archegos itself.

U.S. District Judge Paul Oetken oversees both cases.

The lawsuits were filed on April 27, the same day Archegos’ founder Bill Hwang and former chief financial officer Patrick Halligan were criminally charged with fraud. Both have pleaded not guilty.

Hwang and Halligan are also seeking to dismiss the regulators’ claims, with Hwang having said the SEC failed to allege “any kind of deceit or fraudulent trading conduct.”

Once with $36 billion in assets, Archegos collapsed in March 2021 when it was caught short after making huge bets on stocks through securities known as total return swaps. That sparked a fire sale in stocks, resulting in large losses for Credit Suisse Group AG (CSGN.S), Nomura Holdings Inc (8604.T) and other banks.