Archegos implosion could lead to family-office regulation
Assessing the murky family-office world presents challenges, such as sorting out the different types. The SEC had targeted family office oversight for review this year even before the Archegos blowup.
April 8, 2021 3 MINS
When Archegos Capital Management recently stepped on a derivatives landmine, it may have set off an explosion that will have repercussions for advisory firms that manage wealthy families’ finances.
In late March, Archegos defaulted on margin calls involving swaps transactions that forced the sale of approximately $20 billion in underlying securities. The conflagration, which caused major investment banks to lose nearly $10 billion, is likely to draw regulatory scrutiny of family offices, a category that includes Archegos.
PRIMER: Regulation Best Interest
IFLR’s latest free-to-read primer looks at Securities and Exchange Commission’s Regulation Best Interest, addressing what it is, what it does and related retail investor protection issues April 07 2021
Regulation Best Interest (Reg BI) is a Securities and
Exchange Commission (SEC) package of rules aimed at improving the quality and
transparency of retail investors’ interactions with investment advisers and
broker-dealers.
IFLR’s latest free-to-read primer looks at the rule,
addressing what it is, what it does and related retail investor protection
issues.
What is Regulation
Best Interest?
The rule, adopted in 2019, requires
that investment recommendations by advisers and broker-dealers are made in the customers’
Sponsored
Archegos Capital, the heavily leveraged family office of former Tiger Cub Bill Hwang, reportedly triggered huge losses in a handful of stocks, including ViacomCBS and Discovery, that began last Friday. Now the new chairman of the Securities and Exchange Commission, Gary Gensler, and other global regulators are considering what to do to prevent a similar implosion.
The stock meltdown impacted six banks who lent money on margin to Hwang’s family office, including Goldman Sachs, Morgan Stanley, Credit Suisse, and Nomura. The chaos apparently started when Hwang couldn’t make his margin calls. The banks started selling shares of the companies on Friday, rocking the markets and sending investors into a tail spin to figure out what was happening.
Lawmakers want SEC to clarify how brokers can hold digital securities
The lack of guidance on custody is slowing the adoption of cryptographically based assets, experts say
December 10, 2020 3 MINS
A bipartisan group of lawmakers is calling on the Securities and Exchange Commission to clarify how broker-dealers can hold digital securities.
In a letter Wednesday to SEC Chairman Jay Clayton, nine members of the House of Representatives said the agency should develop requirements necessary for brokers to custody securities issued on blockchain or distributed ledgers, such as virtual currency, coins and tokens.
They noted that in July, the Office of the Comptroller of the Currency clarified that banks can provide custody of such cryptographic assets. They added that the SEC and the Financial Industry Regulatory Authority Inc. last year issued a joint statement on digital assets but haven’t set out custody policies, which has left B-Ds in limbo.