Morgan Stanley and Goldman Sachs’ roles in volatility of ViacomCBS raises questions

Morgan Stanley and Goldman Sachs’ roles in volatility of ViacomCBS raises questions

Signage for Morgan Stanley is displayed at the company's headquarters in New York.

Morgan Stanley and Goldman Sachs, two of the firms at the center of the Archegos Capital Management unwinding, played a variety of roles before, during and after the margin call.

That is raising questions about whether the firms should have had a compliance function to intervene in their potentially conflicting roles in the same stock.

One of the key triggers that led to the unwinding of Archegos was a tepid market response for a multibillion-dollar ViacomCBS secondary offering last Wednesday.

While certain bankers at Morgan Stanley and Goldman Sachs were pitching that deal to investors, some of their peers in the prime brokerage division were growing increasingly concerned about the risk profile of one of their clients, a family office called Archegos, which had large, leveraged exposure to ViacomCBS.

Following a 23% decline by ViacomCBS amid the secondary offering, Goldman Sachs, Morgan Stanley and a slew of other banks across Wall Street, triggered a margin call on Archegos.

This prompted the two giant investment banks to seize Archegos' assets, including billions of dollars' worth of ViacomCBS stock, and sell it off through heavily discounted block trades. The move created significant pressure on the