Archegos hedge fund founder Bill Hwang sentenced to 18 years in prison for massive fraud

NEW YORK – The founder of Archegos Capital Management, a hedge fund, was sentenced to 18 years in prison Wednesday for a securities and market manipulation fraud in a scheme that prosecutors say cost global investment banks billions of dollars.

Bill Hwang was told the length of his prison sentence after he told Judge Alvin K. Hellerstein in Manhattan federal court that he felt “really bad about what happened at Archegos,” referring to the expiration of funding three years ago.

However, the judge did not complete the sentencing hearing and said the hearing would continue on Thursday. But he said he “explained” the length of the prison sentence imposed on him.

Hellerstein estimated that as many as nine financial institutions suffered losses of more than $9 billion due to fraud.

At Hwang’s trial in July, prosecutors indicted Hwang and his accomplices, saying they artificially inflated the value of nearly a dozen stocks before the investments collapsed in March 2021, wiping out $100 billion in market value along with the company he created.

Hwang was convicted on 10 counts in July, but was acquitted on one of the market manipulation charges and convicted on the other six.

Prosecutors say Hwang lied He asked banks to give him billions of dollars to expand his New York-based investment firm before his portfolio grew from $10 billion to $160 billion.

At the start of Hwang’s trial, Assistant U.S. Attorney Alexandra Rothman told jurors that Hwang was already a billionaire when he aimed to “become a legend on Wall Street” with a complex scheme that involved trading stock derivatives to secretly build extraordinarily large positions in the stock market. just a few companies.

According to the indictment, the investment public did not know that Archegos had dominated the trading and share ownership of more than one company due to the use of securities that were not required to be publicly disclosed. For example, prosecutors said Hwang and his firm once secretly controlled more than 50 percent of ViacomCBS stock.

But the risky maneuvers left the firm’s portfolio vulnerable to price swings in a handful of stocks.

The indictment states that margin calls made in late March 2021 destroyed more than $100 billion in market value in just a few days.