Archegos founder Bill Hwang was sentenced to 18 years in prison Wednesday related to charges of fraud and market manipulation tied to the 2021 fall of his family firm Archegos that caused banking shares across Europe and the U.S. to fall.
Sung Kook “Bill” Hwang, founder and head of private investment firm Archegos Capital Management, arrives for his sentencing hearing at the Manhattan federal courthouse on Wednesday in New York City.
Getty Images
Key Takeaways
- Hwang, whose real name is Sung Kook, was sentenced by U.S. District Judge Alvin Hellerstein in New York on Wednesday, multiple outlets reported, and received a sentence below the 21 years prosecutors asked for.
- A jury found Hwang guilty in July on 10 of the 11 criminal counts he faced of securities fraud, wire fraud, conspiracy, racketeering and market manipulation.
- Prosecutors alleged in the trial that Hwang and Patrick Halligan, former chief financial officer of Archegos, “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.”
What To Watch For
A determination on how much Hwang will pay in restitution. The judge said he needed more information to decide how much Hwang should pay victims and asked attorneys to file briefs on the matter by Dec. 5, Bloomberg reported.
Key Background
Hwang began Archegos after closing his hedge fund, Tiger Asia, and successfully constructing an internet stock portfolio. Tiger Asia was shut down in 2012—the year before Hwang opened Archegos—after the Securities and Exchange Commission brought insider trading and market manipulation allegations against it and the firm admitted to breaking the law and paid $44 million in fines. After that, Hwang set up Archegos as a “family office,” meaning it was not subject to SEC reporting requirements.
]In 2021, the firm defaulted on highly leveraged margin calls—meaning he was unable to add funds upon a broker’s request, which allows the broker to sell holdings to cover the default—triggering a firesale of around $30 billion in stocks from companies including ViacomCBS and Discovery Communications.
When announcing charges against Hwang and three others, the Justice Department alleged the crash of the artificially inflated stock prices, most notably ViacomCBS’, and caused the companies at the center of Archegos’ trading scheme to lose more than $100 billion in market capitalization.
Prosecutors alleged he lied about how big Archegos’ investments were at the time, how much cash the firm had and the nature of the stocks to inflate the company’s portfolio from around $1.5 billion to $35 billion in one year and so Wall Street banks “would have no idea what Archegos was really up to, how risky the portfolio was, and what would happen if the bubble burst one day.” In addition, Credit Suisse and Nomura, both of whom were brokers for Archegos, had losses of $5.5 billion and $2.3 billion, respectively.
