Brown, chairman of the Senate Banking Committee, points to the banks ’ties to Archegos

Senator Sherrod Brown, chairman of the powerful Senate Banking Committee, points to the links of three banking giants with Archegos Capital after recent fund losses have swept the market.

In letters to Goldman Sachs, Nomura Holding America and Credit Suisse, the Ohio Democrat indicates he is looking for details about his relationship with Archegos. The letters, first reviewed by CNBC, are dated Wednesday.

Archegos, a family-run investment office run by former Tiger Management analyst Bill Hwang, triggered a sell-off in shares such as Discovery and ViacomCBS last month when it was forced to liquidate its positions in those companies.

Several banks were trapped by the consequences. Credit Suisse and Nomura were two major brokers that suffered significant losses. Two Credit Suisse executives announced they would step down.

Goldman, on the other hand, managed to sell most of the shares related to Archegos ’margin calls and avoided losses.

Brown sent letters to Goldman CEO David Solomon to Crystal Lalime, CEO of Credit Suisse, and Yo Akatsuka, CEO of Nomura Holding America.

The letters are the first response from Congress that hints at a possible investigation and goes beyond initial statements that only condemn market chaos, such as the one Brown issued last week. At the time, Brown asked regulators to take a closer look at Archegos.

The committee has jurisdiction over the largest banks in the world and regularly collaborates with the heads of the Securities and Exchange Commission. The SEC reportedly opened a preliminary investigation into Hwang and his recent trades.

Senator Elizabeth Warren, D-Mass., Who is also a member of the Senate Banking Committee, recently told CNBC that “the fall of Archegos had all the effects of a dangerous situation.”

Brown’s letters to the three bank officials attempt to delve deeper into the links between financial institutions and Archegos.

The details and the final consequence of Archegos ‘failure remain to be seen, but the massive transactions and losses raise several questions about Goldman Sachs’ relationship with Archegos and the treatment of so-called “family offices,” the story of Mr. Hwang and transactions that have been mentioned in news reports, ”the letter tells Solomon.

Brown continues to urge executives to “explain the review and the process of incorporating the client into family offices, including consideration of whether the family office is subject to regulatory records or reports.”

At Archegos, Brown calls for “the process of incorporating the client, including the approvals of any supervisor or risk committee, by Archegos, to identify when he became a client” along with requests to banks to “identify the broker -broker, the bank and other entities, directly or indirectly, that participate in transactions with Archegos and that participated in the margin call and in the sales of resulting shares. “

Brown is asking Goldman, Credit Suisse and Nomura to respond to their letters by April 22nd.