Tag: Maureen Farrell

Goldman, Morgan Stanley Limit Losses With Fast Sale of Archegos Assets

Mary Pat Campbell

Link: https://www.wsj.com/articles/goldman-morgan-limit-losses-with-fast-sale-of-archegos-assets-11617062028?mod=djemwhatsnews

Excerpt:

The steep losses at Archegos come as a council of top U.S. regulators known as the Financial Stability Oversight Council is already scheduled to meet on Wednesday to discuss hedge-fund activity during the pandemic-triggered crisis. The meeting is the first for the risk council during the Biden administration, which has pledged to scrutinize financial weaknesses revealed by the pandemic-triggered market tumult from March 2020. The council is made up of the heads of the Treasury Department, Federal Reserve and other agencies.

Mr. Dweck, the consultant, pointed to a case that many on Wall Street are hearing echoes of this week: Long-Term Capital Management, a massive hedge fund that blew up in 1998. Firms learned the full extent of the hedge fund’s problems only when government officials summoned them to Long-Term’s offices to pore over its records, he said.

“The upshot is, you’re going to have stuff like this happen,” Mr. Dweck said.

Author(s): Maureen Farrell, Margot Patrick, Juliet Chung

Publication Date: 30 March 2021

Publication Site: Wall Street Journal

Greensill Faces Possible Insolvency After Credit Suisse Suspends Investment Funds

Mary Pat Campbell

Link: https://www.wsj.com/articles/credit-suisse-suspends-funds-tied-to-softbank-backed-greensill-11614599752

Excerpt:

Specialty finance firm Greensill Capital headed toward a rapid unraveling after Credit Suisse Group AG suspended $10 billion of investment funds that fueled the SoftBank Group Corp.-backed startup.

With a key source of financing frozen, Greensill appointed Grant Thornton to guide it through a possible restructuring, and it could file for insolvency, the U.K. equivalent of bankruptcy, within days, according to people familiar with the company.

….

U.K.-based Greensill is the brainchild of former Citigroup Inc. and Morgan Stanley financier Lex Greensill. Founded in 2011, Greensill specializes in an area known as supply-chain finance, a form of short-term cash advance that lets companies stretch out the time they have to pay their bills.

Greensill packages those cash advances into bondlike securities that give investors a higher return than they could get from bank deposits. Credit Suisse’s funds were a major buyer of those securities.

Author(s): Julie Steinberg, Duncan Mavin, Ben Dummett, Maureen Farrell

Publication Date: 1 March 2021

Publication Site: Wall Street Journal

Robinhood’s Reckoning: Facing Life After GameStop

Mary Pat Campbell

Link: https://www.wsj.com/articles/robinhoods-reckoning-can-it-survive-the-gamestop-bubble-11612547759?mod=djemwhatsnews

Excerpt:

Many startup founders dream of the day their creation claims the top spot in Apple Inc.’s app store. For Vlad Tenev, Robinhood Markets Inc.’s chief executive, it was more like a nightmare.

Mr. Tenev and his co-founder, Baiju Bhatt, had set out eight years earlier to bring the stock market to a new class of investors. With engineers plucked from Facebook Inc. and other tech giants, they stripped down the trading experience and eliminated commissions, making buying a share of stock about as easy as posting a photo on Instagram.

It worked. During the pandemic, throngs of amateur investors—homebound, bored and flush with stimulus checks—opened Robinhood accounts to experience the market’s thrills. By the end of December, the firm had amassed about 20 million users, according to people close to it, and weeks later its app hit the top of download charts.

Author(s): Peter Rudegeair, Kirsten Grind and Maureen Farrell

Publication Date: 5 February 2021

Publication Site: Wall Street Journal