Three top US banks will hand over more than $100 million to settle a lawsuit related to the collapse of a multi-billion-dollar investment firm.
Morgan Stanley, Goldman Sachs and Wells Fargo have agreed to pay a combined $120 million to settle a lawsuit alleging they hid conflicts of interest when selling ViacomCBS shares, which contributed to the collapse of Bill Hwang’s Archegos Capital Management, reports Reuters.
[adinserter block="1"]The case against the three banks was filed last month by former shareholders of ViacomCBS, now known as Paramount Global.
Archegos, a family office that once managed $36 billion, collapsed in March of 2021 when Hwang’s leveraged investment bets in ViacomCBS and other firms fell through. Archegos had about $20 billion of ViacomCBS exposure.
The three banks helped Archegos place massive bets on ViacomCBS and other stocks, while at the same time, they acted as underwriters for ViacomCBS in a secondary offering.
Investors led by the Camelot Event Driven Fund and the Municipal Police Employees’ Retirement System of Baton Rouge, Louisiana, accused the three banks of hiding their roles with Archegos and selling off their shares to avoid losses.
The settlement is pending approval by a judge in New York state court.
Morgan Stanley, Goldman and Wells Fargo have denied wrongdoing in agreeing to settle the lawsuit.
Hwang and former Archegos chief financial officer Patrick Halligan were convicted of fraud in 2024 over the firm’s collapse. Hwang was sentenced to 18 years in prison and Halligan was sentenced to eight years in prison. Both are appealing while out on bail.
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