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Investing.com -- Morgan Stanley (NYSE:MS), Goldman Sachs and Wells Fargo (NYSE:WFC) have agreed to pay $120 million to settle a lawsuit that claimed they concealed conflicts of interest during sales of ViacomCBS (NASDAQ:PARA) shares, which contributed to the downfall of Bill Hwang’s Archegos Capital Management.
The proposed settlement with former shareholders of ViacomCBS, now known as Paramount Global, was filed in New York state court in Manhattan this month and still requires judicial approval.
Archegos, a family office that once managed $36 billion, collapsed in March 2021 when Hwang failed to meet margin calls on bank loans used to make substantial investments in ViacomCBS and other media and technology stocks.
Investors led by the Camelot Event Driven Fund and the Municipal Police Employees’ Retirement System of Baton Rouge, Louisiana, alleged that the banks hid their positions as Archegos counterparties and sold their shares to minimize losses.
The banks served as prime brokers for Archegos, which had approximately $20 billion exposure to ViacomCBS and had assisted in underwriting ViacomCBS common and preferred stock offerings in March 2021.
While agreeing to the settlement, Morgan Stanley, Goldman Sachs, and Wells Fargo denied any wrongdoing, according to a July 1 court filing. The specific payment amount for each bank was not disclosed, though Morgan Stanley handled about 45% of the offerings while the other banks managed considerably less. All three banks declined to comment on Monday.
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