Big Banks’ Underwriting Firewalls at Risk in Archegos-Tied Suit

Wall Street giants fear a New York appeals court decision could upend the entire process for underwriting stock offerings.

The decision allows ViacomCBS Inc. investors to sue Morgan Stanley, Goldman Sachs Group Inc., and Wells Fargo & Co. over alleged conflicts in the media company’s offerings that weren’t disclosed. It puts under a microscope the firewalls inside the banks that are supposed to prevent investment bankers and underwriters from sharing information.

Legal scholars say the case also risks creating fuzzy obligations for banks to disclose their own potential trading when they facilitate offerings of new securities to investors. ...