The founder of Archegos Capital Management, a hedge fund, has been sentenced to 18 years in prison for securities and market manipulation fraud. The sentencing took place in Manhattan federal court where the judge imposed the prison term on the founder, Bill Hwang.
Hwang expressed remorse for the events that led to the demise of Archegos, acknowledging the impact of the scheme that prosecutors described as costing global investment banks billions of dollars. The judge estimated that up to nine financial institutions suffered losses exceeding $9 billion due to the fraud.
During the trial, prosecutors accused Hwang and his co-conspirators of artificially inflating the values of multiple stocks before their investments collapsed in March 2021. This collapse resulted in a market value loss of $100 billion, affecting the company Hwang had built.
Hwang was convicted of 10 criminal counts, including securities and market manipulation fraud. Prosecutors highlighted how Hwang misled banks to secure billions of dollars for his investment firm, which saw its portfolio grow significantly from $10 billion to $160 billion.
Assistant U.S. Attorney Alexandra Rothman described Hwang's actions as an attempt to become a 'legend on Wall Street' through a sophisticated scheme involving stock derivatives trades. The indictment revealed that Archegos had secretly controlled a significant portion of shares in companies like ViacomCBS without public disclosure.
The risky maneuvers undertaken by Archegos left its portfolio vulnerable to price fluctuations in specific stocks, leading to margin calls in March 2021 that wiped out over $100 billion in market value within days.
