Meet Bill Hwang, the man behind Archegos Capital Management

A massive margin call hit a little-known family office last Friday, incurring billions of dollars in losses for some of the banks involved and rocking global volatility in the broader market.

Archos Capital Management’s leveraged bets on ViacomCBS have exploded and triggered a huge wave of forced $ 20 billion liquidation at a large number of Wall Street banks, some of which face losses that could be “very important ”.

Archegos Capital Management is the family investment vehicle founded by former Tiger Management analyst Bill Hwang in 2013. He was a protégé and one of the so-called “little tigers” of legendary hedge fund manager Julian Robertson who mentored and supported some of the best. successful investors, including Stephen Mandel, Lee Ainslie and Chase Coleman.

Hwang started out as a stock seller at Hyundai Securities in the early 1990s.

Prior to Archegos, Hwang founded the New York-based hedge fund Tiger Asia Management, which focused on Asian investments. In 2012, Hwang pleaded guilty to insider trading in Chinese bank stocks and agreed to pay $ 44 million to settle the Securities and Exchange Commission fees. The federal agency alleged that it used confidential information received in connection with private placement offers to short-sell three Chinese bank stocks.

After colonization, Hwang closed Tiger Asia Management and Archegos was born.

Archegos is a Greek biblical word for chief or prince.

“These are difficult times for the Archegos Capital Management family office, our partners and our employees,” Karen Kessler, spokesperson for Archegos, told CNBC. “All plans are being discussed as Mr. Hwang and the team determine the best way forward.”

Archegos held large and leveraged bets on US media stocks ViacomCBS and Discovery, as well as a few Chinese Internet ADRs including Baidu, Tencent and Vipshop. Some of the positions were held through total return swaps, a type of derivative that allows investors to take large and leveraged stakes without disclosing those positions publicly.

Those bets started going south after ViacomCBS’s $ 3 billion stock offering via Morgan Stanley and JPMorgan earlier in the week collapsed. This triggered a domino effect where prime brokers rushed to exit positions on behalf of Archegos and resulted in a massive margin call.

When making a margin call, brokerage firms require an investor to deposit additional money or securities into the account when a position falls sharply in value. Brokerages typically sell securities in block trades, often at a discount from the current stock price, in an attempt to recoup losses.

Nomura, an Archegos prime broker, warned Monday of a “significant loss” estimated at $ 2 billion following the unfolding of transactions.

Credit Suisse said the loss resulting from the exit could be “very significant and significant” to its first quarter results.

Hwang also has a charity called “Grace and Mercy Foundation” with $ 500 million in assets, according to the latest tax returns, spotted by Robert Frank of CNBC.

The foundation has maintained a low profile in the charity world, even with its enormous size.

The charity created generous tax cuts for Hwang’s investments.

For example, Hwang donated a gain of $ 20 million in Amazon shares over the past year, which allowed him to avoid capital gains tax and obtain a tax deduction.

Hwang has donated $ 16 million in the past year to Korean Christian causes.

– CNBC’s Robert Frank contributed reporting.