The founding father of Archegos Capital Management, a hedge fund that collapsed in 2021, was convicted Wednesday of securities and market manipulation fraud in a scheme that prosecutors said cost global investment banks billions of dollars.
Bill Hwang looked straight ahead and took several sips of water as the decision was read after the jury found him guilty on 10 counts. He was acquitted of 1 count of market manipulation, but found guilty on six others.
Federal prosecutors in New York said Hwang and his accomplices artificially inflated the worth of nearly a dozen stocks before the investments collapsed, wiping out $100 billion in market value and the corporate he founded.
Hwang’s lawyer had argued that his client was an honest investor who had invested his money in stocks he believed in.
Prosecutors say Hwang lied to banks to boost billions of dollars to expand his New York-based investment firm, growing its portfolio from $10 billion to $160 billion.
Assistant U.S. Attorney Alexandra Rothman told jurors at the beginning of the trial that billionaire Hwang desired to “become a legend on Wall Street” and was involved in a plot that involved trading stock derivatives to secretly construct extraordinarily large positions in only a number of firms.
Hwang’s lawyer Barry Berke said in his opening statement that his client “did not live the life of a billionaire” and didn’t make any false statements about his business to any bank.
In his closing argument earlier this week, Berke told the jury his client was innocent, saying, “Mr. Hwang bet big on stocks he believed in. That is not a crime.”
The indictment says investors were unaware that Archegos dominated trading and stock ownership of several firms since it used securities that weren’t subject to disclosure requirements. At one point, Hwang and his company secretly controlled greater than 50 percent of ViacomCBS’s shares, prosecutors said.
However, the dangerous maneuvers made the corporate’s portfolio vulnerable to cost fluctuations in a handful of stocks.
Margin calls at the top of March 2021 worn out market values value greater than $100 billion inside a number of days, the indictment says.
Nearly a dozen firms defrauded by Archegos, in addition to banks and prime brokers, lost billions consequently, the indictment says.
The jury also convicted the corporate’s former chief financial officer, Patrick Halligan.
