(Bloomberg) -- Goldman Sachs Group Inc. and Morgan Stanley were sued by shareholders of a Chinese online-education company that accused the banking giants of trading on inside information when unloading the stock they held for Archegos Capital Management.

The complaint in New York federal court by Gaotu Techedu Inc. investors alleges that the two Wall Street firms sold several large blocks of shares in companies in which Archegos held positions after confidentially learning that the family office controlled by Bill Hwang was likely to fail in meeting margin calls. The sales sent Gaotu Techedu shares into “a complete tailspin,” the investors say.

Read More: Goldman, Morgan Stanley Sued Over Archegos-Tied Sales

Archegos collapsed in March as some of its more than $100 billion in positions tumbled, triggering margin calls from banks, which then dumped their holdings. The ensuing rout caused lenders to lose more than $10 billion and forced internal probes and the departures of senior executives. The Justice Department and the Securities and Exchange Commission have opened investigations into the firm.

Morgan Stanley declined to comment on the complaint and Goldman Sachs didn’t immediately respond to a request for comment.

Read More: Bill Hwang Was a $20 Billion Whale, Then Lost It All in Two Days

The complaint was filed exactly a week after a shareholder in Vipshop Holdings Ltd., a Chinese e-commerce company, brought similar claims against Goldman Sachs and Morgan Stanley.

Gaotu Techedu was formerly known as GSX Techedu Inc. Hwang, a former Julian Robertson protege and Tiger Management analyst, ramped up his stake of Chinese ADRs in September of last year, though it’s unclear how much he bet on GSX. The holding was significant enough that when banks unraveled Archegos’s portfolio, shares of GSX fell by more than half. 

The case is Florio v. Goldman Sachs Group Inc., 21-cv-8618, U.S. District Court, Southern District of New York.


(Updates with former name of Gaotu Techedu)

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