Template:Archegos goldman

While other brokers to Archegos shipped losses most conveniently measured in the billions, one — Goldman — yes, that Goldman — reported “immaterial losses”.

Be assured, other brokers will be stamping their feet, cracking their cheeks, cursing obstreperous ill fortune, beating their fists on the ground, beseeching whichever mischievous God looks after the fates of regulated broker-dealers and wailing “how in the name of all that is holy can it be that while I took a regular shellacking, again, that Goldman outfit got away with it, without so much as a crease in its trousers, again?”

“What kind of second sight, what extra-sensory perception, what gift, what compromising photographs of the Almighty must Goldman have to lead such a honeyed life? What does the Vampire Squid have over the Fates that we other mortal dealers do not?”

Perhaps, I gingerly venture, nothing? Perhaps it is as simple as this: Goldman didn’t have much risk on in the first place. This may be prudent business selection; it may be that Goldman didn’t have much of a relationship with Archegos at all. According CS’s credit risk team in April 2020, “Archegos had disclosed that its long positions with CS were “representative” of the positions Archegos held with its six other prime brokers at the time (namely Morgan Stanley, Jefferies, Nomura, Wells Fargo, Deutsche Bank, and UBS).”

Notice anyone missing?

If this is right, then less than 12 months before Götterdämmerung, Archegos wasn’t on Goldman’s books at all. If, as it claimed, Archegos preferred to “leg into” positions pro rata across its prime brokers, then a very-late-to-the-party Goldman may not have had much Archegos risk on its book. And with little risk, similarly few revenues to forfeit. Without that long, deep, fearful, profitable client relationship, Goldman had less skin in the game, may have treated Archegos with less reverence than its peers, may have declined to put positions on in such a cavalier fashion, and then been less bothered about upsetting its customer by closing it out at the first sign of trouble. This is consistent with how, by all accounts, Goldman conducted its book during Archegos’ end game.