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RADNOR, PA / ACCESSWIRE / November 28, 2021 / The law firm of Kessler Topaz Meltzer & Check, LLP reminds investors that a class action lawsuit has been filed against Goldman Sachs Group Inc. ("Goldman Sachs") and Morgan Stanley (collectively, "Defendants"), charging both companies with violations of the federal securities laws, including insider trading, relating to their unlawful disposal of Gaotu Techedu Inc. ("Gaotu") (NYSE:GOTU) American Depository Shares. Defendants' unlawful sales of Gaotu shares allowed them collectively to avoid billions in losses while investors suffered significantly.
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LEAD PLAINTIFF DEADLINE: December 20, 2021
CLASS PERIOD: March 22, 2021 through March 29, 2021
CONTACT AN ATTORNEY TO DISCUSS YOUR RIGHTS: James Maro, Esq. (484) 270-1453 or Toll Free (844) 887-9500 or Email at info@ktmc.com
DEFENDANTS' ALLEGED MISCONDUCT
Both Goldman Sachs and Morgan Stanley are global financial services institutions that served as the prime brokers for Archegos Capital Management ("Archegos"), a family office investment fund with $10 billion under management and whose assets included ViacomCBS Inc. ("ViacomCBS") and Gaotu, both of which Archegos had big concentrated positions in. Unbeknownst to investors and regulators, Defendants had simultaneously allowed Archegos to take on billions of dollars of exposure to volatile equities through swaps contracts, dramatically elevating the risk posed by these concentrated positions.
On March 25, 2021, MoffettNathanson published a report questioning ViacomCBS's value, downgrading the stock to a "sell," and setting a price target of only $55 per share, compared to the company's $85 offer. Following that report, ViacomCBS's stock fell dramatically and closed at $48 per share on Friday, March 26, 2021. Since Archegos had traded ViacomCBS on margin, it was required to maintain a certain amount of collateral to avoid triggering a margin call. On March 27, 2021, it was reported that Archegos failed to cover and, as a result, had to liquidate more than $20 billion of its leveraged equity positions on Friday, March 26, 2021.
Then, on April 6, 2021, CNBC.com reported that "Morgan Stanley sold about $5 billion in shares from Archegos' doomed bets on U.S. media and Chinese tech names to a small group of hedge funds late Thursday, March 25," before the MoffettNathanson report reached the public. The article also reported that Goldman Sachs quickly disposed of its shares tied to Archegos. These sales by Defendants were made with confidential, insider information, including that Gaotu was among the few securities Archegos had to liquidate, and allowed Defendants to unlawfully avoid billions of dollars in losses combined.