(LibertyInsider.org) – A federal jury convicted Sung Kook “Bill” Hwang, the Archegos Capital Management founder and owner, of fraud and racketeering charges on Wednesday, July 10. Prosecutors accused Hwang and Patrick Halligan, his co-defendant, of manipulating the market ahead of his company’s 2021 failure, leaving banks and investors on the hook for losses totaling more than $100 billion.
The government argued that Hwang and his chief financial officer, Halligan, lied to banks regarding the amount of stock that Archegos leveraged through its own and clients’ holdings. The two manipulated the banks into loaning the company around $10 billion, which they used to inflate the stock prices of several publicly traded firms by making strategic purchases.
Archegos founder Bill Hwang convicted at criminal trial over $36B fund’s collapse https://t.co/2nTn6xCUOe pic.twitter.com/DJaMDlMjQJ
— New York Post (@nypost) July 10, 2024
US Attorney Damian Williams of the Southern District of New York said the fraudulent scheme allowed the defendants to build Archegos Capital Management’s portfolio from $1.5 billion to $36 billion. At its zenith, the company had $36 billion in assets but also held liability for $160 billion in equity exposure.
When the scheme imploded, global investment banks lost $10 billion overnight while shareholders lost more than $100 billion. The collapse caused shockwaves throughout US, European, and Asian stock markets and caused regulators on the three continents to evaluate trade practices.
The defense team for Hwang and Halligan countered, saying prosecutors had criminalized trading methods which, while aggressive, technically remained legal. The jury disagreed, finding Hwang guilty of three counts of fraud, racketeering conspiracy, and six of the seven counts of market manipulation. The jury also convicted Halligan of racketeering conspiracy and two counts of fraud.
A judge could impose a maximum sentence of 20 years in prison for each count. However, the judge can modify sentences based on a range of factors. As of July 10, the court had not set a sentencing date.
Williams said the jury’s decision “should send a resounding message” to “those who think they can cheat the system.” He stated that the DOJ would maintain vigilance in policing financial markets to hold manipulators to account.
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