The former Wall Street operator and founder of Archegos Capital Management, Bill Hwang, has been sentenced in the United States to 18 years in prison for fraud and market manipulation that triggered the bankruptcy of the ‘family office’ in 2021, causing losses of thousands of million for different financial firms, according to Europa Press.
Hwang, 60, was sentenced Wednesday by U.S. District Judge Alvin Hellerstein to slightly less than the 21 years prosecutors were demanding.
“The amount of loss caused by his conduct is greater than any loss figure I have ever faced as a judge,” said Hellerstein, who called defense attorneys’ request to avoid prison time “absolutely ridiculous” and compared Hwang with FTX founder Sam Bankman-Fried, who received a 25-year sentence for fraud, according to Bloomberg.
During the eight-week trial, which took place this summer, Hwang was accused of using secret trading strategies to drive up the stock prices of media and technology groups before a series of adverse events led to a sudden liquidation in March. of 2021.
The sell-off that followed shook global stock markets and left Archegos lenders, including Credit Suisse, Nomura, Morgan Stanley and UBS, with combined losses of more than $10 billion (€9.468 billion) and prompted a renewal of the due diligence processes in some of the most important banks on Wall Street, according to ‘Financial Times’.
Hwang, of South Korean origin, came to the United States at the age of 19 and studied Economics, working between 1996 and 2001 at the Tiger Management firm to later found and direct Tiger Asia, a fund focused on Asian stocks, which closed in 2012, and founding a year later Archegos.
According to the complaint filed in 2022 by the United States Securities and Exchange Commission (SEC), the family office acquired total return swaps between March 2020 and March 2021 through margin operations worth billions. of dollars. This type of financial product allows an investor to take a large position in stocks without the need to make a large initial capital outlay.
The opening of these positions would have sought to artificially raise the prices of several securities, which induced other investors to enter said securities, boosting the value of Archegos from 1,500 million (1,420 million euros) and an exposure of 10,000 million (9,468 million euros) in March 2020 at a value of 36,000 million (34,086 million euros) and an exposure of 160,000 million (151,496 million euros) a year later.
However, in March 2021, the firm collapsed because price declines in a security where it had a high exposure forced Archegos to meet margin calls that it could not cover.
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