Biggest blowups among financial funds


Financial institutions Nomura and Credit Suisse faced billions of dollars in losses after a highly leveraged U.S. investment fund called Archegos Capital defaulted on margin calls, triggering a fire sale of stocks on Friday, a source familiar with the matter said.

Here are some of the biggest failures among hedge funds that have rippled through the financial markets:

September 1998: Long Term Capital Management collapsed after its mathematical model failed to foresee the Russian debt crisis, and received a $3.5 billion bailout from large financial institutions, orchestrated by the Federal Reserve, to avert widespread financial chaos. The hedge fund estimated that a default could have cost its 17 top counterparties between $3 billion and $5 billion.

UBS booked a pretax loss of $1.25 billion on exposure to LTCM.

September 2006: Amaranth Advisors LLC, a former $9.2 billion hedge fund, collapsed after losing about $6.4 billion in natural gas bets.

July 2007: Sowood Capital, which managed money for Harvard University, lost roughly half of its $3 billion in capital in less than a month, becoming the first high-profile victim of the credit market crisis.

December 2008: Bernard Madoff’s hedge fund was revealed to be one of the largest financial frauds in history, having lost as much as $65 billion of its clients’ money in a Ponzi scheme.

May 2009: Pequot Capital shut down its $3 billion fund amid a government probe into insider trading.

October 2009: Galleon Group, which specialized in technology and healthcare stocks, liquidated its $3.7 billion portfolio after its founder, Raj Rajaratnam, was charged with masterminding the biggest-ever insider-trading scheme involving hedge funds.

November 2013: Steven A. Cohen’s $16 billion SAC Capital Advisors LP was forced to wind down after the company pleaded guilty to five fraud counts in connection with a wide-ranging insider trading scheme that spanned more than a decade.

June 2019: UK-focused LF Woodford Equity Income Fund was suspended and eventually wound down after regulators and investors blasted veteran money manager Neil Woodford for the $3.85 billion fund’s heavy exposure to unlisted, hard-to-sell stocks.