Lawyers and securities experts said a multi-billion dollar family office like Archegos could avoid giving 13F disclosures, but it would require threading a needle: the company could only have managed money for Mr. Hwang and his spouse – not other family members, fund employees or his charity that operated on the same floor of an office building in Midtown Manhattan. The company could also have skipped filing a 13F if it had sold enough stock to break below the $ 100 million mark before the end of each quarter. It could also have filed for confidential treatment with the SEC to keep such disclosures private, lawyers and experts said.
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April 12, 2021, 3:04 p.m. ET
Archegos was set up to file filings with the SEC – it had its own central index key number – but a search for documents returned no results.
The SEC has launched an informal investigation into Archegos and the impact of its collapse, which caused billions in losses at banks around the world. The supervisory authorities refused to comment on the investigation.
Senator Sherrod Brown, chairman of the Senate Banking Committee, sent letters to half a dozen banks that did business with Archegos – including Credit Suisse, Goldman Sachs, and Morgan Stanley – asking for information about their dealings with Mr. Hwang’s firm. This includes information on transactions that “would be subject to regulatory reporting with the SEC”.
The rules for filing 13F apply to “Registered Investment Advisers and Exempt Reporting Advisors who manage accounts on behalf of others, including advisors for separately managed accounts, private funds, mutual funds and retirement plans”. You must file if you have more than $ 100 million in securities discretion at the end of a quarter.
Nicolas Morgan, a former SEC attorney, said a family office could only circumvent the reporting requirement in rare cases. It would be “out of the norm” not to file a 13F, said Morgan, a partner in employee defense practice at Paul Hastings.
Following Archegos’ failure, the Americans for Financial Reform advocacy group sent the SEC a letter requesting a review of the 13F filings and explaining whether loopholes in the disclosure process create the exemption for registering family offices that have assets equal to Control around $ 6 trillion, according to Campden Wealth, which provides research and networking opportunities to wealthy families.
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