Archegos Capital Management founder Sung-Kook “Bill” Hwang was convicted by a jury in a criminal trial in Manhattan federal court on Wednesday after prosecutors accused him of manipulating markets ahead of the 2021 collapse of his $36 billion private investment firm.
Jurors began deliberations Tuesday morning, a day after closing arguments in the trial of Hwang and his co-defendant, Patrick Halligan, an Archegos associate. Prosecutors have alleged that Hwang and Halligan lied to banks to obtain billions of dollars in funding and artificially inflated the stock prices of several publicly traded companies. The trial began in May.
Archegos’ collapse sent shock waves through Wall Street and triggered regulatory scrutiny on three continents.
The 60-year-old Hwang had pleaded not guilty to one count of conspiracy to organize crime, three counts of fraud and seven counts of market manipulation. He was found guilty on 10 of the 11 charges.
Harrigan, 47, had pleaded not guilty to one count of organized crime conspiracy and two counts of fraud. Harrigan was Archegos’ chief financial officer. He was convicted of all charges he faced.
They currently face up to 20 years in prison for each charge they were convicted of, but the sentences will likely be much lighter than that and will be imposed by a judge based on a variety of factors.
When accused To be introduced in 2022The Justice Department said the case is an example of its determination to hold accountable those who distort and defraud U.S. financial markets.
The trial focused on the collapse of Hwang’s family office, Archegos, which caused $10 billion in losses to banks around the world and, according to prosecutors, more than $100 billion in losses to shareholders of its portfolio companies. Prosecutors said Hwang’s conduct harmed U.S. financial markets and the investing public, and caused significant losses to banks, market participants and Archegos employees.
Prosecutors said Hwang secretly held huge stakes in several companies without actually owning any of the stock. He lied to banks about the size of Archegos’ derivatives trades to borrow billions of dollars that he and his subordinates then used to artificially inflate the prices of the underlying shares, prosecutors said.
Prosecutors accused Harrigan of lying to the bank and aiding in the criminal scheme.
In closing arguments, Assistant U.S. Attorney Andrew Thomas told jurors, “By 2021, the defendants’ lies and manipulation had led to a $100 billion fraud that compromised the stocks of nearly 10 companies and half of Wall Street, and that fraud collapsed within days.”
Hwang’s defense team called the indictment “the most aggressive open market manipulation case ever brought by a U.S. prosecutor.” In his closing arguments, Hwang’s lawyer, Barry Burke, told the jury that prosecutors had criminalized aggressive but legal trading techniques.
Archegos’ head trader William Tomita and chief risk officer Scott Becker testified as prosecution witnesses after pleading guilty to related charges and agreeing to cooperate in the case.
Hwang’s assets eclipsed those of the two companies’ biggest investors, driving up their stock prices, according to the U.S. Attorney’s Office for the Southern District of New York, which filed the case. At its peak, Archegos had $36 billion in assets and $160 billion in equity exposure, prosecutors said.
