A former worker of Archegos, the funding agency that brought on a short market panic when it misplaced greater than $10 billion in a matter of days final yr, is suing the agency and its founder, Invoice Hwang, plus 5 former high executives. The lawsuit was filed on Tuesday in Federal District Court docket in Manhattan, the DealBook e-newsletter reviews.
Brendan Sullivan, a tech inventory analyst who joined Archegos in 2014 and resigned shortly after it blew up, stated he had misplaced $50 million, which was a part of a $500 million deferred worker compensation plan that evaporated together with Archegos’s different property when its extremely leveraged choices technique failed.
The swimsuit seeks to power Mr. Hwang and others to cowl the losses. Mr. Hwang was charged with fraud by federal prosecutors this yr on suspicion of deceptive lenders and market manipulation, and has pleaded not responsible to the federal government swimsuit. Final week, attorneys for Archegos filed motions to dismiss different fits towards the agency from the Commodity Futures Buying and selling Fee and the Securities and Trade Fee.
Fund workers had been instructed that the deferred pay plan was assured, the swimsuit says, and that it was invested in extremely liquid shares. Neither declare was true, in response to the swimsuit. What’s extra, it says, workers had been pressured to contribute not less than 25 p.c of their annual bonus to the plan, and declare how a lot they might defer earlier than they knew the main points of the bonus.
“The message was crystal clear,” the swimsuit argues. “No contribution. No bonus.”
Michael Bowe of Brown Rudnick, Mr. Sullivan’s lawyer, instructed DealBook that “Hwang and these executives lied to their workers like they lied to the banks.” A lawyer for Mr. Hwang declined to remark. A spokesman for Archegos didn’t responded to a request for remark.
The fund tried to dissuade workers from quitting, and forged doubts over deferred compensation funds in the event that they did, the swimsuit says. Mr. Sullivan, who left anyway, has not obtained any cash from the plan, although as lately as January the corporate continued to vow former workers that they might obtain funds, in response to a letter seen by DealBook that Archegos despatched to former workers.
Archegos was run like a “cult,” the swimsuit says. Job interviews “revolved round faith and an investigation into the candidate’s spiritual upbringing,” in response to the swimsuit. Throughout efficiency opinions, it says, Mr. Hwang, who’s a Christian, instructed workers to “dedicate extra time to their religion.” At firm retreats, in response to the swimsuit, workers obtained reward for publicly declaring gratitude for “God, Hwang and Archegos.”
