“ All the ingredients of a dangerous situation ”

Senator Elizabeth Warren is targeting Archegos Capital Management and the lightly regulated hedge fund industry after their stock trading caused a frenzy in the market late last week.

“The collapse of Archegos had all the makings of a dangerous situation – a largely unregulated hedge fund, opaque derivatives, transactions in private dark pools, high leverage and a trader who escaped from SEC enforcement, “Warren told CNBC in a statement Tuesday.

“Regulators must rely on more than luck to fend off risks to the financial system: we need transparency and strong oversight to make sure the next hedge fund explosion doesn’t drag the economy along with it.” , she added.

Warren, who is a member of the powerful Senate banking and finance committees, is one of the first lawmakers to respond to what turned out to be disastrous jobs by Archegos, a family office founded by former Tiger Management Bill analyst. Hwang.

The fund’s trades caused ViacomCBS stock to fall.

By the time Credit Suisse and Nomura, two of Archegos’ main brokers, announced early Monday that they were facing losses that could be “very large” for banks, rival firms Goldman Sachs and Morgan Stanley had already finished trading. unload their positions, according to people with knowledge of the subject. They requested anonymity to talk about private negotiations.

Goldman managed to sell most of the shares related to its Archegos margin calls on Friday, helping the company avoid any loss in the episode, according to one of the people. Morgan Stanley sold $ 15 billion in shares within days, avoiding significant losses, CNBC’s Leslie Picker reported.

– CNBC’s Hugh Son and Leslie Picker contributed to this report.