Michael M. Santiago/Getty Images News
Bill Hwang, founder of Archegos Capital Management, has been convicted of fraud and market manipulation that led to the hedge fund managing over $36B in assets at its peak, before its collapse in 2021.
The verdict followed an eight-week trial, with the jury finding Hwang guilty on 10 of 11 criminal charges, including fraud, conspiracy, and racketeering. Archegos’ former CFO Patrick Halligan was found guilty on all three counts he faced.
The men will remain free, on bail, till their sentencing on October 28. They could face up to 20 years in prison for each charge.
Prosecutors alleged that Hwang and Halligan lied to banks to secure billions of dollars to place large bets on tech and media companies through equity swaps, artificially pumping up their stock prices.
“In doing so, Hwang and Halligan were able to fraudulently inflate a $1.5B portfolio into a $36B portfolio,” said Damian Williams, U.S. Attorney for the Southern District of New York.
When Archegos couldn’t repay lenders, it led to a huge stock selloff, after which the fund collapsed. Banks, including Credit Suisse, Nomura (NMR), Morgan Stanley (MS) and UBS (UBS), suffered more than $10B in losses. Shareholder losses in Archegos’ portfolio companies totaled over $100B.
Hwang previously worked at hedge fund legend Julian Robertson’s Tiger Management. The ‘tiger cub’ – a name given to Robertson’s protégés – then launched his own hedge fund, Tiger Asia Management in 2001, but later faced insider trading charges that he pled guilty to in 2012.