All Blue's wrong-way short bets failed to settle — and cost Nomura and Mizuho >$100M

All Blue Capital, an investment fund led by managing partner Matt Novak, a former emerging-markets trader at Commerzbank, made a series of wrong-way short bets with multiple counterparties in early 2024. According to New York legal filings, the fund was allegedly unable to settle the trades, and two of its units were placed into liquidation in the British Virgin Islands in March 2024.

The failure to settle triggered a chain of losses across some of Japan's largest financial institutions. Nomura Holdings was left nursing a possible loss of 14 billion yen, while Mizuho claimed in a New York lawsuit that All Blue owed it $19 million that it had not repaid. Combined, the potential losses exceed $100 million.

The affair raised fresh questions about risk management at Nomura and Mizuho, both still repairing their controls after the roughly $3 billion collapse of Archegos Capital Management in 2021. Nomura set aside funds to cover the potential loss in April, which pushed its European subsidiary into a pretax loss for the quarter. All Blue contested the claims and called Mizuho a "disgruntled purported unsecured creditor."