How Goldman and Morgan Stanley avoided losses after fund meltdown burned Nomura, Credit Suisse

How Goldman and Morgan Stanley avoided losses after fund meltdown burned Nomura, Credit Suisse

People are seen on Wall St. outside the New York Stock Exchange (NYSE) in New York City, March 19, 2021.

When investors are stampeding for the exits, it pays to be first out the door.

That's what happened when falling shares in ViacomCBS last week ignited a $20 billion wave of forced selling at the Wall Street banks that cater to Archegos Capital Management, the family office founded by former Tiger Management analyst Bill Hwang.

By the time Credit Suisse and Nomura, two prime brokers of Archegos, announced early Monday that they faced losses that could be "highly significant" to the banks, rival firms Goldman Sachs and Morgan Stanley had already finished unloading their positions, according to people with knowledge of the matter.

Goldman managed to sell most of the stock related to its Archegos margin calls on Friday, helping the firm avoid any losses in the episode, according to one of the people. Morgan Stanley sold $15 billion in shares over a few days, avoiding significant losses, CNBC's Leslie Picker reported.

Investors punished the two non-U.S. banks. Nomura ended Monday down 14%, while Credit Suisse slid 11.5% when the market closed. Meanwhile, Morgan Stanley dropped 2.6% and Goldman shares dipped a modest 0.5%.

"In this environment,