Bill Hwang

Prosecutors accuse hedge fund manager and former lieutenant of scheme that was 'historic in scope'

The men were charged with crimes including racketeering conspiracy and securities fraud in a scheme the U.S. attorney called “historic in scope.”.

“And we allege that they told those lies for a reason: so that the banks would have no idea that Archegos was really up to a big market manipulation scheme.” Authorities said Mr. Becker and Mr. Tomita understood that if they were truthful with the banks about the amount of risk Archegos was taking on, the financial institutions would not keep arranging new derivatives trades for it. When Mr. Hwang could not pay, the banks sold off millions of shares that were backing the swaps and took control of collateral that Archegos had posted in exchange for its big borrowings. The risky result: Archegos held enormous positions in a small number of stocks using billions in borrowed money. Mr. Hwang knew that Archegos could affect markets simply through the exercise of its buying power, the complaint said. The collapse of Archegos shocked Wall Street and led to investigations by federal prosecutors, the Securities and Exchange Commission and other regulators. Archegos used a complex security sold by banks called a total return swap, allowing Mr. Hwang to wager on the movement of stocks without actually buying them. It lost more than $5 billion, and the trading debacle led to a number of top-level management changes at the bank. At one point, Archegos effectively controlled $160 billion in a small basket of stocks that included ViacomCBS and Discovery, prosecutors said. The swap allowed Archegos to quickly take on much larger positions in companies than it normally would be able to if it were buying shares outright. And it spread its bets across several banks using sophisticated financial instruments called swaps, which allowed Mr. Hwang to bet on the direction of stock prices without actually owning the shares. Mr. Hwang was arrested at his home in Tenafly, N.J.

Archegos Capital Management's owner, Bill Hwang, and its former chief financial officer, Patrick Halligan, were arrested Wednesday.

As a result, investors were unaware that Archegos was dominating the trading of a few select companies. At the time, he was running an Asia-focused hedge fund, Tiger Asia Management. Last May, Ark Invest CEO Cathie Wood disclosed that Hwang had provided the seed funding for her first four ETFs. After Archegos couldn't meet its margin calls, the firms' counterparties suffered significant losses. In a 59-page indictment, federal prosecutors allege Hwang used his personal fortune to manipulate markets and commit fraud in a scheme that had far-reaching consequences. It also shed light on potential risks at family offices, which are private funds that operate under less regulatory oversight than hedge funds. - Archegos Capital Management's owner, Bill Hwang, and its former chief financial officer, Patrick Halligan, were arrested Wednesday in connection with the implosion of the family office last year.

Bill Hwang, the enigmatic investor behind one of the most spectacular trading debacles in Wall Street history, was arrested Wednesday morning over what ...

Federal prosecutors allege the scheme swelled the firm's portfolio from $1.5 billon to $35 billion in a single year.

“The house of cards could only be sustained if that cycle of deceptive trading, lies and buying power continued uninterrupted,” Grewal said in a statement. In 2012, the regulator accused him and his former fund, Tiger Asia, with insider trading and market manipulation. (The lack of prosecutions contributes to the wide range.) But some of those wagers went the wrong way, prompting Archegos’s lenders to ask to be repaid. Swap holders stand to gain or lose based on the price of the underlying assets. The case marks one of the highest-profile criminal white-collar prosecutions in years.

The charges unsealed in an indictment in Manhattan federal court named Bill Hwang, the founder of Archegos Capital Management, and his former chief financial ...

Over $100 billion in market value disappeared in days for nearly a dozen companies and banks and prime brokers duped by Archegos lost billions, the indictment said. “A prosecution of this type, for open-market transactions, is unprecedented and threatens all investors,” he said in a written statement. They face racketeering conspiracy and fraud charges.

Archegos Capital Management founder Bill Hwang and Patrick Halligan were arrested by federal agents and indicted on charges including securities fraud and ...

The new SEC Chairman Gary Gensler has said he may look to expand regulation of family offices — possibly by requiring that they disclose their positions. In the wake of the Archegos collapse, regulators have sought to understand how one person could have controlled so much stock without disclosing it. A former protégé of famed investor Julian Robertson, Hwang opened his family office in 2013 after shuttering two hedge funds following an SEC insider trading probe in 2012. “Bill Hwang is entirely innocent of any wrongdoing,” his lawyer, Lawrence Lustberg, said in a statement. Hwang relied on massive leverage and risky derivatives to take concentrated positions. However, Archegos head trader William Tomita and director of risk management Scott Becker have both pled guilty and are cooperating with investigators, Manhattan US Attorney Damian Williams said at a Wednesday press conference.

It could be one of the most high-profile white-collar prosecutions in recent memory.

Here's what's happened so far in the aftermath of the tapes: They lied about the nature of the stocks that Archegos held. Here's a timeline of his remarks, consolidated for brevity's sake. And we allege that they told those lies for a reason, so that the banks would have no idea that Archegos was really up to a big market manipulation scheme." We allege that they lied, a lot," said Damian Williams, the U.S. Attorney for the Southern District of New York, during a press conference announcing the charges. They lied about how much cash Archegos had on hand.

The billionaire head of Archegos Capital Management, a former protégé of hedge-fund titan Julian Robertson, faces fraud and racketeering charges.

- Opinion: How Elon Musk Can Liberate Twitter You may cancel your subscription at anytime by calling Customer Service. More than $100 billion in stock market value vanished in a matter of days.

Archegos Capital Management founder Bill Hwang and former chief financial officer Patrick Halligan have been indicted on charges of securities fraud, ...

- Opinion: How Elon Musk Can Liberate Twitter You may cancel your subscription at anytime by calling Customer Service. More than $100 billion in stock market value vanished in a matter of days.

Archegos Capital Management was a family office run by Bill Hwang, a former Tiger Cub hedge fund manager, that invested his personal fortune. Starting in about ...

Archegos used these profits, leveraged with more money borrowed from its banks, to buy more of its favorite stocks. Starting in about 2020, Archegos’s investment strategy consisted of buying a whole ton of shares of like 10 stocks, using mostly money borrowed from about a dozen banks. As the prices went up, Archegos had mark-to-market profits: The shares it bought earlier at lower prices were worth more, so it had made money.

Last year, he lost $20 billion in two days, exposing the still-dark corners of Wall Street. On Wednesday morning, he was arrested for fraud.

But Hwang’s and Halligan’s arrests hearken back to the era following those days, when the Manhattan U.S. Attorney’s office, then led by Preet Bharara, prosecuted a parade of hedge-fund managers, such as Raj Rajaratnam, for fraud and insider trading — many of whose convictions were later overturned on appeal, owing to the vague case law that defines securities fraud. Credit Suisse, one of the banks that helped Archegos build up its positions, lost $5.5 billion, shut down the brokerage unit that works with hedge funds, and admitted to falling down on the job, while other banks such as Nomura, Morgan Stanley, UBS, and Mistubishi UFJ also saw hundreds of millions in losses. The amount of money on the line was so huge, and so risky, that the Archegos’s chiefs allegedly knew they were heading into the abyss. Hwang was able to swell Archegos so much and so quickly through the kind of financial engineering that is still commonplace on Wall Street today, if not to the extent allegedly executed by Archegos. The main tool in Hwang’s arsenal was a synthetic instrument that moved in lockstep with the price of stock that he already owned. Things collapsed last March. At the time, Archegos’s position in ViacomCBS was so large that it was the equivalent of half of all of the company’s outstanding shares, even though, on paper, it would have been a minor investor, according to the indictment. “The collapse of Archegos last spring demonstrated how activities by one firm can have far-reaching implications for investors and market participants,” Gary Gensler, chairman of the Securities and Exchange commission, said in a statement.

The now-notorious owner of Archegos Capital Management took extraordinary risks by leveraging stock positions and artificially inflating their prices, ...

The $2 billion in trading consumed Archegos' cash and it would not be able to meet its margin calls if the offensive failed. And when they did, billions of dollars of capital evaporated nearly overnight." On March 22, 2021 Hwang's house of cards started to teeter. The banks began unwinding the trades, sending the shares tumbling. Wall Street banks were initially wary of Hwang due to his regulatory issues, but eventually Japan's Nomura gave him a second chance. Hwang pleaded guilty to wire fraud related to illegal trading of Chinese stocks and paid $44 million to settle U.S. insider trading charges. Hwang turned Tiger Asia into a family office, renaming it Archegos Capital Management in early 2013. This allowed Archegos to accumulate leverage of as much as 1,000%. "No. It is a sign of me buying," he replied. In these trades, banks promised Archegos a return based on the performance of a handful of stocks. Wearing a green turtleneck and beige slacks, Hwang later pleaded not guilty in a Manhattan court and was released on a $100 million bail bond. His lawyer said he was "entirely innocent."

Are we going to be able to pay for these trades today? I don't see how we can.”