NEW YORK, (Reuters) – Archegos Capital Management founder Sung Kook “Bill” Hwang was convicted of fraud and other charges by a jury in Manhattan federal court yesterday at a criminal trial in which prosecutors accused him of market manipulation ahead of the 2021 collapse of his $36 billion private investment firm.
The jury, which began deliberations on Tuesday, found Hwang guilty on 10 of 11 criminal counts and Patrick Halligan, his Archegos deputy and co-defendant, guilty on all three counts he faced. Hwang and Halligan sat flanked by their lawyers as the verdict was read by a soft-spoken foreperson.
U.S. District Judge Alvin Hellerstein set the sentencing for Oct. 28. Both men will remain free on bail.
The Archegos meltdown sent shock waves across Wall Street and drew regulatory scrutiny on three continents. Prosecutors have said Hwang and Halligan lied to banks in order to obtain billions of dollars that they used to artificially pump up the stock prices of multiple publicly traded companies. The trial began in May.
Damian Williams, the U.S. attorney in Manhattan, said the verdict should send a clear message that his office will hold accountable people like Hwang and Halligan “who think they can cheat the system.”
Hwang, 60, had pleaded not guilty to one count of racketeering conspiracy, three counts of fraud and seven counts of market manipulation. Hwang was acquitted on a market manipulation charge related to a Chinese online video company, iQIYI IQ.O.
Halligan, 47, had pleaded not guilty to one count of racketeering conspiracy and two counts of fraud. Halligan was the chief financial officer at Archegos.
They now face maximum sentences of 20 years in prison on each charge for which they were convicted, though any sentence would likely be much lower and would be imposed by the judge based on a range of factors.
The trial centered on the implosion of Hwang’s family office Archegos, which inflicted $10 billion in losses at global banks and, according to prosecutors, and caused more than $100 billion in shareholder losses at companies in its portfolio. Prosecutors said Hwang’s actions harmed U.S. financial markets as well as ordinary investors, causing significant losses to banks, market participants and Archegos employees.
Hwang secretly amassed outsized stakes in multiple companies without actually holding their stock, according to prosecutors. Hwang lied to banks about the size of the derivative positions of Archegos in order to borrow billions of dollars that he and his deputies then used to artificially inflate the underlying stocks, prosecutors said.
Halligan was accused by prosecutors of lying to banks and enabling the criminal scheme.
