Goldman Sachs and Morgan Stanley have successfully appealed against claims of market manipulation and insider trading that contributed to Archegos Capital Management’s $36 billion collapse in March 2021. The 2nd U.S. Circuit Court of Appeals ruled that Archegos did not owe fiduciary duties to the companies it owned, clearing the banks of liability.

Investors had accused Goldman and Morgan Stanley of using inside information to sell off billions of dollars in stocks ahead of Archegos’ collapse. The banks were alleged to have known about Hwang’s inability to meet margin calls, leading to losses for investors in stocks like ViacomCBS and Discovery.

Archegos’ downfall was a result of using total return swaps to build up a massive stock exposure. The collapse also caused significant losses for banks like Credit Suisse and Nomura Holdings. Hwang and former CFO Patrick Halligan were convicted of fraud in July 2024.

Goldman, Morgan Stanley, and Wells Fargo agreed to a $120 million settlement in a lawsuit by former ViacomCBS shareholders who accused the banks of hiding conflicts of interest. The recent court decision upheld a dismissal by U.S. District Judge Jed Rakoff in March 2024.

Read more at Yahoo Finance: Goldman Sachs, Morgan Stanley defeat Archegos investors’ insider trading appeals