Bill Hwang, founder of the now-defunct hedge fund Archegos Capital Management, has been found guilty of securities fraud and market manipulation which resulted in billions of dollars in losses for global investment banks, according to a report by the Associated Press.
Hwang, who was convicted in a New York court on a total of 10 criminal counts, was acquitted of one charge of market manipulation but found guilty on six others, after Federal prosecutors successfully argued that he and his co-conspirators artificially inflated the values of nearly a dozen stocks. This manipulation led to the collapse of these investments, wiping out $100bn in market value and leading to the collapse of Archegos Capital Management.
Assistant US Attorney Alexandra Rothman said Huang engaged in a scheme involving stock derivatives to covertly amass large positions in a few companies. “He wanted to be a legend on Wall Street,” she told the jury.
According to Hwang’s lawyer, Barry Berke, though, the billionaire was an honest investor who genuinely believed in the stocks he invested in. Berke emphasised that Hwang made no misrepresentations to banks about his business. In his closing argument, Berke said: “Mr Hwang bet big on stocks he believed in. That is not a crime.”
Margin calls in late March 2021 triggered a catastrophic collapse of Archegos, its nearly a nearly a dozen companies, along with banks and prime brokers suffering substantial losses as a result.
The jury also convicted Archegos’ former chief financial officer, Patrick Halligan, on similar charges.
