This case was last updated from U.S. District Courts on 04/28/2022 at 06:18:54 (UTC).

Commodity Futures Trading Commission v. Archegos Capital Management LP et al

Case Summary

On April 27, 2022, Commodity Futures Trading Commission (“Plaintiff”), represented by John Cullen Murphy, attorney at Commodity Futures Trading Commission, filed a civil enforcement action against Archegos Capital Management, LP (“Archegos”) and Archegos’s Chief Financial Officer, Patrick Halligan (collectively, “Defendants”), seeking injunctive relief, civil monetary penalties and disgorgement of ill-gotten gains for the alleged false and misleading statements made by the Defendants. This case was filed in the U.S. District Court in the Southern District of New York. 



In the complaint, the plaintiff alleged, “In the span of a year, between March 2020 and March 2021 (‘Relevant Period’), Defendants and others acting on their behalf or under their direction (‘Accomplices’), engaged in a scheme whereby they intentionally and/or recklessly provided false or misleading material information and/or omitted to provide such material information to their trading swap counterparties (‘Swap Counterparties’)."



The plaintiff further alleged, “During this period, the value of Archegos’s portfolio increased fifteen-fold before it abruptly collapsed, causing its Swap Counterparties to suffer losses totalling billions of dollars. Archegos’s spectacular rise and catastrophic fall arose from a pattern of deceit in which Defendants and their Accomplices routinely led Archegos’s Swap Counterparties to falsely believe that the portfolio of Archegos Fund, LP (‘Archegos Fund’), a fund managed by Archegos, was far less risky than it actually was."



The plaintiff also alleged, “Beginning in March 2020, Archegos Fund embarked on a new trading strategy that was materially different from its historical practice. Under the new strategy, Archegos, as investment manager of Archegos Fund, caused Archegos Fund to enter into hundred million- dollar swap trades on a daily basis that focused on a concentrated group of securities. Due to the size of Archegos Fund’s positions, they could not easily be liquidated."



The plaintiff also alleged, “These trades were spread across at least eight different counterparties, and therefore each Swap Counterparty saw only a fraction of Archegos Fund’s total exposure. Swap Counterparties thus engaged in frequent oral and written communications with Archegos’s representatives to try to understand the aggregate composition of Archegos Fund’s holdings and to gauge the risk associated with Archegos Fund’s whole portfolio."



The plaintiff alleged, “Defendants and their Accomplices misrepresented and/or hid material facts in order to conceal the true risk of Archegos Fund’s portfolio so that Archegos Fund could obtain additional capacity to trade even greater volumes of highly leveraged, concentrated, and illiquid long positions, while maintaining favourable margin rates."



The plaintiff went on to allege, “Defendants have engaged, are engaging in, or are about to engage in practices that violate the provisions of the Commodity Exchange Act (‘Act’) and the Commission’s regulations (‘Regulations’)."



The plaintiff presented a claim for alleged fraud by deceptive device or contrivance, a  violation of Section 6(c)(1) of the Act, 7 U.S.C. § 9(1) and Regulation 180.1(a)(1)–(3), 17 C.F.R. § 180.1(a)(1)–(3) (2021).



In the prayer for relief, the plaintiff sought a permanent injunction, civil monetary penalties,  and remedial ancillary relief, including but not limited to trading and registration bans, restitution, disgorgement, and other relief that the court may deem necessary. 



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Case Details Parties Documents Dockets

 

Case Details

  • Case Number:

    1:22-CV-03401

  • Filing Date:

    04/27/2022

  • Case Status:

    Pending - Other Pending

  • Case Type:

    Finance - Security/Commodity/Exchange

 

Party Details

Plaintiff

Commodity Futures Trading Commission

Defendants

Archegos Capital Management LP

Patrick Halligan

Attorney/Law Firm Details

Plaintiff Attorney

John Cullen Murphy

Attorney at Commodity Futures Trading Commission

140 Broadway

New York, NY 10005

 

Court Documents

#1

(#1) COMPLAINT against Archegos Capital Management LP, Patrick Halligan. Document filed by Commodity Futures Trading Commission..(Murphy, John) (Entered: 04/27/2022)

#2

(#2) CIVIL COVER SHEET filed..(Murphy, John) (Entered: 04/27/2022)

#3

(#3) REQUEST FOR ISSUANCE OF SUMMONS as to Archegos Capital Management, LP, re: #1 Complaint. Document filed by Commodity Futures Trading Commission..(Murphy, John) (Entered: 04/27/2022)

#4

(#4) REQUEST FOR ISSUANCE OF SUMMONS as to Patrick Halligan, re: #1 Complaint. Document filed by Commodity Futures Trading Commission..(Murphy, John) (Entered: 04/27/2022)

 

Docket Entries

  • 04/27/2022
  • View Court Documents
  • Docket(#4) REQUEST FOR ISSUANCE OF SUMMONS as to Patrick Halligan, re: #1 Complaint. Document filed by Commodity Futures Trading Commission..(Murphy, John) (Entered: 04/27/2022)

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  • 04/27/2022
  • View Court Documents
  • Docket(#3) REQUEST FOR ISSUANCE OF SUMMONS as to Archegos Capital Management, LP, re: #1 Complaint. Document filed by Commodity Futures Trading Commission..(Murphy, John) (Entered: 04/27/2022)

    Read MoreRead Less
  • 04/27/2022
  • View Court Documents
  • Docket(#2) CIVIL COVER SHEET filed..(Murphy, John) (Entered: 04/27/2022)

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  • 04/27/2022
  • View Court Documents
  • Docket(#1) COMPLAINT against Archegos Capital Management LP, Patrick Halligan. Document filed by Commodity Futures Trading Commission..(Murphy, John) (Entered: 04/27/2022)

    Read MoreRead Less