NEW YORK/HONG KONG: U.S. investor Sung Kook"Bill" Hwang was looking for a second chance on Wall Street after falling from grace and shutting his multibillion-dollar hedge fund firm. Japan's Nomura Holdings Inc gave him one.
Hwang and Archegos did not respond to requests for comment. A representative of the family office previously said in a statement that"This is a challenging time for the family office ... our partners and employees." But as the shares that underpinned Hwang's positions continued falling, his banks quickly began scrambling to sell off those stocks to try to stem losses.Bankers on Wall Street describe Hwang as a down-to-earth and polite person. Married with children, he was not seen indulging in a flashy lifestyle, said Wall Street sources who knew him.
He did that by buying derivatives known as total return swaps, which allow investors to bet on stock price moves without owning the underlying securities, according to the sources. Instead, the bank buys the stocks and promises the investor a performance-related return. That client, in turn, posts collateral to secure the trades with the bank.
That included Nomura, which currently ranks 23rd on Preqin's global ranking of prime brokers. After deciding to once again deal with Hwang, the Japanese bank rapidly increased its business with him, seeing it as a strategy to win more business from other large U.S. hedge funds.
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