SHAREHOLDER ALERT: Pomerantz Law Firm Reminds Shareholders with Losses on their Investment in Tencent Music Entertainment Group of Class Action Lawsuit and Upcoming Deadline against Goldman Sachs Group Inc. and Morgan Stanley
NEW YORK, NY / ACCESSWIRE / December 26, 2021 / Pomerantz LLP announces that a class action lawsuit has been filed against Goldman Sachs Group Inc. and Morgan Stanley on behalf of investors in Tencent Music Entertainment Group (“Tencent” or the “Company”) (NYSE: TME). The class action, filed in the United States District Court for the Southern District of New York, filed at 21-cv-09564, is on behalf of all investors who have purchased or otherwise acquired Tencent shares concurrently with the defendants’ illegal dealings beginning March 22 March 2021 through March 29, 2021 inclusive (the “Class Period”), pursuant to Sections 20A, 10 (b) and 20 (a) of the Securities Exchange Act of 1934 (the “Exchange Act”), 15 USC Sections 78t- 1, 78j (b) and 78t (a).
If you are a shareholder who purchased Tencent’s securities during the class action period, you have until December 27, 2021 to request the court to appoint you as the lead plaintiff for the class action. A copy of the complaint is available at www.pomerantzlaw.com. To discuss this promotion, contact Robert S. Willoughby at firstname.lastname@example.org or 888.476.6529 (or 888.4-POMLAW) toll free ext. 7980. Inquiries by email are encouraged to include their postal address, telephone number, and the number of shares purchased.
[Click here for information about joining the class action]
Archegos Capital Management (“Archegos”), a family office mutual fund, was founded and directed by Sung Kook Hwang (“Hwang”), a former portfolio manager of Tiger Asia Management, a hedge fund he also founded.
Goldman Sachs is a global financial services company. Goldman Sachs served as one of Archegos’ prime brokers, helping the company close deals and lending it capital in the form of margin loans.
Morgan Stanley is a global financial services company. Morgan Stanley served as one of Archegos’ prime brokers, helping the company close deals and lending it capital in the form of margin loans.
The story goes on
Archegos described itself as being focused on public stocks in the US, China, Japan, South Korea and Europe. Its approximately $ 10 billion in assets include ViacomCBS Inc. (“ViacomCBS”), Vipshop Holdings Ltd., Discovery Inc., Farfetch Ltd. (“Farfetch”), Gaotu Techedu, Inc., Baidu Inc. (“Baidu”), iQIYI Inc., and Tencent.
Archegos took large, concentrated positions in these companies through financial instruments known as total return swaps, with the underlying securities (stocks) held by banks that broker the investments. The swaps allow investors like Archegos to bet on stock price movements, often with high leverage, without owning the underlying securities. Instead, banks buy and hold the stocks and give the fund a performance-related return. The fund secures the business by providing the bank with collateral such as cash or shares.
These swaps also allow investors to take huge positions while depositing limited funds upfront, essentially loans from the bank, which in turn gives investors the ability to maintain their anonymity even if, for example, Archegos was estimated to have been exposed to the economics of more than 10% of the shares of several companies. Because investors holding more than 10% of a company’s securities are considered company insiders and are subject to additional disclosure and profit requirements, these swaps have been particularly beneficial to Hwang.
Archegos also leveraged its swap strategy to gain exposure to more than $ 50 billion worth of securities. This strategy, too, was partially designed to give Hwang a means of avoiding margin limits and regulatory disclosure requirements.
Unbeknownst to investors and regulators, several large brokerage banks, including the defendant, had simultaneously enabled Archegos to gain billions in volatile stocks through swap contracts, dramatically increasing the risk of these concentrated positions.
Hwang’s swaps strategy began to backfire in March when the share price of companies Archegos had significant exposure to, including Baidu, whose shares were down more than 20% from their February high, and Farfetch, which was down by 15% started selling.
However, it was an announcement by ViacomCBS dated March 23, 2021 that ultimately swept the carpet under Archegos. On that day, ViacomCBS announced a new $ 3 billion offer to fund investments in its streaming service Paramount +, which launched earlier this month.
Later reports, quoting people familiar with the matter, said that the announcement put Archegos under considerable pressure as news of the deal sparked a decline in ViacomCBS’s share price, adding to Archegos’ growing losses. In fact, according to the same report in the Wall Street Journal (published April 6, 2021), the fund had already started selling part of its position in ViacomCBS to offset losses, which only put pressure on the stock.
ViacomCBS set the price for this offer on March 24, 2021. Twenty million shares of Class B common stock should be available at $ 85 per share and 10 million shares of their 5.75% mandatory convertible preferred stock should be available at $ 100 per share. In addition, the underwriters led by Defendants (among others) would be given an option to purchase up to 3 million additional Class B shares and up to an additional 1.5 million mandatory convertible preferred shares. All told, ViacomCBS expected to raise $ 3.06 billion if both options were exercised.
Unfortunately, not everyone was convinced that ViacomCBS deserved such a high rating. For example, on March 25, 2021, MoffettNathanson, one of Wall Street’s most influential research firms, released a report questioning the company’s value, downgrading the stock to “Sell” and comparing it with a price target of just $ 55 per share to . the company’s $ 85 offer was set. “We never thought we would see Viacom[CBS] Trading nearly $ 100 a share, “said the report, which was authored by Michael Nathanson, a co-founder of the company.
As a result of that report, ViacomCBS stock slumped, losing more than half its value in less than a week. In fact, as of the close of trading on Friday, March 26, 2021, ViacomCBS was worth $ 48 per share.
This proved extremely problematic for Archegos, who had been trading ViacomCBS on margin (i.e. with money borrowed). Since Archegos had to hold a certain amount of collateral to please its lenders, and since the value of ViacomCBS stock has plummeted, Archegos needed enough collateral to cover or a margin call (where the lender can force a sell off of the stock) . to bring the investor back into compliance with the margin requirements) could be triggered.
On March 27, 2021, it was reported that Archegos was unable to have coverage and as a result had to liquidate more than $ 20 billion of its leveraged equity positions on Friday, March 26, 2021.
Archegos’ fallout received widespread media coverage in the days and weeks following the company’s notable liquidation for a number of reasons, including dragging some of the world’s most respected financial institutions into the mud.
The lawsuit alleges that during the class action period during the week of March 22, 2021, defendants sold a large number of Tencent shares while in possession of material, non-public information. According to later media reports, the defendants invited on Thursday, April 25th.
As a result of these sales, the defendants were able to avoid losses totaling billions.
Defendants knew or did not know that they were prohibited from trading based on this confidential market-moving information, but traded anyway and sold their Tencent shares to the plaintiff and other members of the group before news of Archegos and Tencent’s shares collapsed.
As a result, the plaintiff and the class was harmed by defendants’ violations of US securities laws.
Pomerantz LLP, with offices in New York, Chicago, Los Angeles, Paris and Tel Aviv, is one of the leading law firms in corporate, securities and antitrust litigation. Founded by the late Abraham L. Pomerantz, known as the Dean of the Class Actions Chamber, Pomerantz pioneered the field of securities class actions. Today, more than 85 years later, Pomerantz is continuing the tradition he founded and fighting for the rights of victims of securities fraud, breach of duty of loyalty and corporate misconduct. The company has collected numerous millions of dollars in damages on behalf of class members. See www.pomlaw.com.
SOURCE: Pomerantz LLP
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