Archegos Founder Bill Hwang Convicted for $36 Billion Fund Collapse

On Wednesday, a jury in Manhattan federal court found Sung Kook “Bill” Hwang guilty in a criminal trial. Prosecutors had accused him of manipulating the market before his private investment firm, Archegos Capital Management, collapsed in 2021, losing $36 billion.

Jury Deliberations and Verdict

Jurors started deliberating on Tuesday after hearing closing arguments in the trial of Hwang and his Archegos deputy, Patrick Halligan. Prosecutors accused them of lying to banks to get billions of dollars, which they used to inflate stock prices of several public companies. The trial began in May. 

The Archegos collapse shook Wall Street and triggered investigations by regulators on three continents. Hwang, 60, pleaded not guilty to racketeering conspiracy, fraud, and market manipulation charges. He was convicted on 10 out of 11 counts. Halligan, 47, also pleaded not guilty to similar charges. As Archegos’ CFO, he was found guilty on all counts against him.

Potential Sentences and Legal Context

They could get up to 20 years in prison for each charge they were found guilty of. The judge will decide their actual sentence based on various factors, which might be less than the maximum.

In 2022, when the charges were filed, the Justice Department said the case showed their dedication to punishing those who cheat and deceive US financial markets.

Overview of the Archegos Implosion

The trial focused on Archegos, Hwang’s family office, which caused $10 billion in losses at global banks and over $100 billion in shareholder losses at companies it invested in. Prosecutors claimed Hwang’s actions hurt US financial markets and ordinary investors, leading to significant losses for banks, market participants, and Archegos employees.

Allegations and Tactics

Prosecutors say Hwang secretly bought big stakes in several companies without owning their stock. They accuse him of lying to banks about Archegos’ derivative positions to borrow billions. His deputies helped inflate stock prices. Prosecutors also accuse Halligan of lying to banks and aiding the scheme.

Closing Arguments and Case Details

In closing arguments, Assistant US Attorney Andrew Thomas told jurors that by 2021, the defendants had deceived and manipulated almost a dozen stocks and half of Wall Street in a $100 billion fraud, which collapsed within days. Hwang’s defense team portrayed the indictment as the most aggressive case of market manipulation ever pursued by US prosecutors. Hwang’s attorney Barry Berke argued to jurors that prosecutors had turned lawful, aggressive trading methods into criminal acts.

Testimony and Cooperation

Archegos’ head trader William Tomita and Chief Risk Officer Scott Becker testified as witnesses for the prosecution. They pleaded guilty to charges and agreed to help with the case. The US Attorney’s Office for the Southern District of New York brought the case. They stated that Hwang’s investments were larger than those of the companies’ biggest investors, which pushed stock prices higher. At its highest point, Archegos held assets worth $36 billion and had exposure of $160 billion in stocks.

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