Archegos Cash Settlement Market Rigging


Operation Disclosure | By David Lifschultz, Contributing Writer

Submitted on March 30, 2021


Compliments of the Lifschultz Organization founded in 1899

We have for many years talked about three major areas of market rigging that profit the Wall Street Cartels in the trillions and they are currency rigging, cash settlement rigging, and naked short stock rigging. These vehicles sop up enormous amounts of bank credit that would have otherwise would have perforce been channeled to productive investments and the Wall Street Parasites suck the blood out of the society as they used to do in the Middle Ages by charging usury on gold as a control mechanism. While that mechanism has evolved into fiat money as the control mechanism through the central banks, the principle is the same if you can foist on the public worthless paper as the coin of the realm.

First, we shall briefly describe how currency rigging profited the few by destroying most of America’s industrial power and profited the industries that could source their manufacturing in cheap labor countries provided the US Federal Reserve went along with it allowing the foreign central banks to dirty float the US dollar by buying it in maintaining their low wage labor competitive age that otherwise would have been erased by the fall in the dollar.

Robert Rubin Correspondence – David Lifschultz

Next, we go into cash settlement. Here half the trades on the US exchanges are called systemic linked as they are to cash settlement.  Here’s how it works. The indexes go up and down as stocks go up and down. If you can lay out a cash settlement position below the market, you can by selling a small amount of shares force the market down so that you can settle your winnings in cash settlement. Let us say that the Dow Jones is at 33,000 and you buy a cash settlement instrument on the Dow whereby if the Dow settles below 32,900 you make money. So if it settles at 32,800 you make a 100 points. Now, if your position that settles for cash is a billion dollars on that 100 points, and you can drive the stocks down the day before with shares you own to 32,800 at the close at a cost of hundred million dollars in the cost of the shares that you own, you make 900 million dollars.  


In a sense this acts as a short in that you are betting the market will go down only you do not have to buy back the short stock to cover your short. In any ordinary short, you sell the stock you short but you must borrow it to deliver. Theoretically, when you buy back the short it acts as a self-correcting mechanism balancing out unless other factors intervene such as a poor earnings report or a good earnings report, then that will adversely or positively affect your position. But here is cash settlement you do not have to buy back your position so there is no self-correcting mechanism.

Next we come to naked shorting of stock. Here you sell the stock short but do not borrow the stock that you are shorting and this means that you are naked in the short. This enables you as in the case of Gamestop to short more shares than exist. This is illegal.


Updated Mar 13, 2021

Naked shorting is the illegal practice of short selling shares that have not been affirmatively determined to exist. Ordinarily, traders must borrow a stock or determine that it can be borrowed before they sell it short. So naked shorting refers to short pressure on a stock that may be larger than the tradable shares in the market.

Now, in the Archegos cash settlement the entire markets are starting to shake even though the positions had no underlying security beneath them and settled for cash. Such synthetic positions are what the derivative markets are all about as the 600 trillion dollar of derivatives according to the BIS to 1.5 quadrillion according to Swiss sources exceed by a large multiple the 87.5 trillion world GDP. While these are largely notional, they can swing into the red in any crisis such as we might have here or if the Straits of Hormuz are closed.

Crucially, as Bloomberg notes, this means Archegos may never actually have owned most of the underlying securities – if any at all – as the CFD is akin to a privately-arranged (i.e. off exchange and bespoke) futures contract where the differences in the settlement between the open and closing trade prices are cash-settled (there is no delivery of physical goods or securities with CFDs).


In the case of Archegos, there is very little transparency about Hwang’s trades, but market participants suggest his assets had grown to anywhere from $5 billion to $10 billion in recent years with total exposure topping $50 billion. And bear in mind, this is not ‘leverage’ in the old-fashioned sense (i.e. banks allow you buy X-times the amount of stocks relative to your capital); this is purely synthetic – the firm has no actual underlying asset to fall back on, but is linearly exposed to losses (and gains) on a margined basis.

CFDs – The Dirty Little Secret Behind The Collapse Of Archegos

Prime Brokers Pounded: Credit Suisse, Nomura Crash On Archegos Margin Call Shockwave

David Lifschultz
Tel: (212) 688-8868


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