Topline
A jury found Bill Hwang, founder of Archegos Capital Management, guilty on 10 charges related to the 2021 collapse of the firm that led banking shares across Europe and the U.S. to fall, putting an end to the two-month trial.
Bill Hwang, founder of Archegos Capital Management, arrives at Manhattan Federal Court on July 10, ... [+]
Key Facts
Hwang, whose real name is Sung Kook, was found guilty on 10 of the 11 criminal counts he faced of securities fraud, wire fraud, conspiracy, racketeering and market manipulation, and Patrick Halligan, former chief financial officer of Archegos, was found guilty on all three counts he faced, multiple outlets reported Wednesday afternoon.
Charges were filed against Hwang, Halligan and two others in 2022, and prosecutors alleged at the time they “lied to banks to obtain billions of dollars that they then used to inflate the stock price of a number of publicly-traded companies,” leading “billions of dollars of capital (to evaporate) nearly overnight.”
Prosecutors said Hwang lied about how big Archegos’ investments were, how much cash the firm had and the nature of the stocks in order to mislead banks on Wall Street and inflate Archegos’ portfolio from $1.5 billion to $35 billion in just one year.
Throughout the trial, Hwang’s lawyers argued the prosecution was trying to “criminalize high-risk and aggressive trading,” The New York Times reported.
What To Watch For
Hwang’s sentencing. A judge scheduled sentencing for Oct. 28, and Hwang faces up to up to 20 years in prison for each charge, meaning he could spend the rest of his life behind bars.
Key Background
Hwang’s firm defaulted on highly leveraged margin calls in 2021 and triggered a fire sale of about $30 billion in stocks including ViacomCBS, Baidu and Discovery Communications. Hwang grew his fortune after closing his hedge fund, Tiger Asia, and having a successful trading run and constructing a portfolio of internet stocks, Forbes’ previously reported. Because Archegos had the status of a “family office,” it was not subject to the Securities and Exchange Commission’s reporting requirements. Two brokers for Archegos, Credit Suisse and Nomura, posted losses of $5.5 billion and $2.3 billion, respectively, because of the defaults, and Goldman Sachs and Morgan Stanley had to liquidate smaller positions they had for Archegos. The Justice Department alleged that in the days after Archegos’ fall, companies at the center of its scheme lost more than $100 billion in market capitalization and employees lost millions.
