By Luc Cohen and Jonathan Stempel
Archegos Capital Management founder Sung Kook “Bill” Hwang was ordered to spend 18 years in prison for fraud and market manipulation tied to the stunning 2021 collapse of his $US36 billion ($55.4 billion) family office, capping a case that riveted Wall Street.
Hwang was sentenced by US District Judge Alvin Hellerstein in Manhattan, where a jury convicted Hwang in July on 10 criminal charges including wire fraud, securities fraud and market manipulation.
Bill Hwang’s lawyers have said his net worth has fallen to “at most” $US55.3 million.Credit: Bloomberg
Archegos’ March 2021 implosion took less than a week, stunning Wall Street and Hwang’s lenders.
The US Attorney’s office in Manhattan sought a 21-year prison term for Hwang – unusually long for a white-collar case – and for him to forfeit $US12.35 billion and make restitution to victims.
“It stands among a rare class of cases that truly could be described as a national calamity,” prosecutor Andrew Thomas said at the sentencing hearing before Hellerstein.
Before sentencing Hwang, Hellerstein asked the defendant’s lawyer, Dani James, how she thought Hwang compared to Sam Bankman-Fried, who was sentenced in March to 25 years in prison for stealing $US8 billion from users of the now-bankrupt FTX exchange.
“Mr Bankman-Fried was literally stealing from his customers,” James said. “I don’t think that’s what’s happened here.”
Hwang had asked for no prison, forfeiture or restitution, and to remain free on bail while he appealed his conviction. James said his low risk of committing more crimes meant a lengthy prison term served no purpose.
“The notion that he would commit a crime in the future, it’s just not so,” James said.
She stressed his charitable work and humble lifestyle, noting that he still lives in a modest New Jersey home. But the judge expressed scepticism about Hwang’s claim of modesty, noting his “new apartment in Hudson Yards”.
Several banks suffered losses, including Credit Suisse, which lost $US5.5 billion.Credit: Bloomberg
Hwang spoke only briefly, saying he felt “deep pain” about what happened at Archegos. After thanking his wife and supporters who wrote letters seeking leniency, he asked the judge to impose a sentence that would allow him to continue to serve society.
Bankman-Fried denies wrongdoing and is appealing his conviction.
Hwang, 60, was a protege of late hedge-fund billionaire Julian Robertson.
He set up Archegos in New York as a family office in 2013, the year after his former hedge fund Tiger Asia Management pleaded guilty to wire fraud in an insider-trading case.
‘It stands among a rare class of cases that truly could be described as a national calamity.’
Prosecutor Andrew Thomas
Prosecutors accused Hwang of lying to banks about Archegos’ portfolio so he could borrow money aggressively and make concentrated bets on media and technology stocks such as ViacomCBS, now called Paramount Global.
While Archegos eventually managed $US36 billion, Hwang’s borrowing helped him amass $US160 billion of exposure to stocks.
His downfall occurred when Hwang was unable to meet margin calls as prices of some of his favourite stocks began falling and various banks unloaded stocks that had backed his so-called total return swaps.
More than $US100 billion ($154 billion) of market value in Hwang’s stocks was wiped out. Several banks suffered losses, including Credit Suisse, which lost $US5.5 billion, and Nomura Holdings. Credit Suisse is now part of UBS.
Hwang’s lawyers’ request for no punishment also cited Hwang’s Christian faith and his nonprofit Grace and Mercy Foundation, which has since 2006 donated at least $US600 million to combat homelessness, poverty and human trafficking, among other causes.
Hwang’s fortune was once estimated to be upwards of $US10 billion.
Hwang’s co-defendant, former Archegos chief financial officer Patrick Halligan, was convicted at the same trial on three criminal charges. His sentencing is scheduled for January 27. Both chose not to testify at their two-month trial.
Reuters, Bloomberg
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