How Goldman And Morgan Stanley Broke Ranks And Triggered The Biggest Margin Call Since Lehman

We already had a pretty good sense of what happened last Friday when the quiet, stealthy liquidation of the now infamous Tiger cub Archegos spilled out into the open and transformed itself into the biggest and most painful rolling margin call to hit Wall Street since Lehman, as at least six Prime Brokers scrambled to unwind the biggest hedge fund blowup since LTCM without hammering the overall market. To wit, earlier today we said that there is a simple difference between Prime Broker and Crime Broker, and it consists in dumping your client's exposure first before others figure out what's going on.

Crime Broker vs Prime Broker: when you dump your client's exposure first before others figure out what's going on

 zerohedge (@zerohedge) March 29, 2021

Then, this afternoon, an article by Bloomberg confirmed our hypothesis, that the unwind of Archegos was several days in the making and only deteriorated dramatically on Friday after one or more of the banks decided that a game theoretical approach - one where nobody defects from the Prisoner's Dilemma - was impossible, and proceeded to puke their holdings (for the record, this was Goldman and Morgan Stanley, but more on that in a second).