In a seismic courtroom decision, Sung Kook “Bill” Hwang, the architect behind the collapsed $36 billion Archegos Capital Management, was convicted of fraud and market manipulation. The Manhattan federal jury, after deliberating since Tuesday, delivered a guilty verdict on 10 out of 11 charges against Hwang. His right-hand man, Patrick Halligan, was found guilty on all counts he faced.
U.S. District Judge Alvin Hellerstein has slated their sentencing for October 28, with both men remaining free on bail until then. The repercussions of Archegos’ downfall were felt across the global financial landscape, prompting intense regulatory scrutiny. Prosecutors accused Hwang and Halligan of deceiving banks to secure billions, which they used to inflate stock prices artificially. The trial, which kicked off in May, laid bare the intricate web of deceit that led to Archegos’ implosion.
The U.S. Attorney in Manhattan underscored the verdict’s significance, emphasizing that it serves as a stern warning to those who attempt to game the financial system. Hwang, who faced multiple charges including racketeering conspiracy and market manipulation, was acquitted on one count related to the Chinese video company iQIYI. Halligan, formerly Archegos’ CFO, confronted similar charges.
The pair potentially face decades behind bars, though their actual sentences will be determined by the judge based on various factors. The trial highlighted the catastrophic fallout from Archegos’ collapse, which triggered $10 billion in losses for global banks and more than $100 billion in shareholder value destruction.
Prosecutors painted Hwang as the mastermind who covertly amassed large stakes in numerous companies without owning the actual stock. They alleged he misled banks about Archegos’ derivative positions to secure loans, which were then used to manipulate stock prices. Halligan was implicated in perpetuating the scheme by falsifying information to banks.
During closing arguments, the prosecution depicted a sprawling fraud that ensnared half of Wall Street and led to a $100 billion debacle. Hwang’s defense argued that the indictment represented an unprecedented move to criminalize aggressive trading strategies. Key testimony came from former Archegos insiders who turned state’s evidence, detailing how Hwang’s strategies dwarfed the investments of major shareholders, inflating stock values unsustainably.
The unwinding of Archegos’ positions in March 2021 triggered a cascade of sell-offs by banks, wiping out shareholder value and inflicting multi-billion dollar losses on financial institutions. The fallout was severe, with Credit Suisse losing $5.5 billion and Nomura Holdings $2.9 billion.
This conviction marks another dramatic chapter in Hwang’s tumultuous career. His prior venture, Tiger Asia Management, folded amid regulatory troubles in 2012, following which Hwang rebranded it as Archegos Capital Management. Despite a wary Wall Street, he managed to rebuild, only to face another spectacular collapse.
As the financial world digests this verdict, it stands as a testament to the high stakes and perilous nature of market manipulation, serving as a cautionary tale for the future.
