Jonathan Stempel
NEW YORK (Reuters) – Bill Hwang, the founder of Archegos Capital Management, should spend 21 years in prison for running a market manipulation scheme that ruined his $36 billion company and cost lenders more than $10 billion, federal prosecutors said on Friday.
Hwang, 60, faces a Nov. 20 sentencing in Manhattan federal court after being convicted in July of 10 criminal charges, including securities fraud, wire fraud and racketeering conspiracy.
Prosecutors accused Hwang of lying to banks about his Archegos portfolio so he could aggressively borrow money and make concentrated bets on shares of media and technology companies such as ViacomCBS (NASDAQ:) through so-called total return swaps.
Hwang accumulated $160 billion in equity exposure but was unable to meet margin calls as prices began to fall.
This led to the collapse of Archegos in March 2021 and caused vast losses for banks such as Credit Suisse, now part of UBS, and Nomura Holding (NYSE:) while various banks unloaded shares in support of Hwang’s swaps.
Hwang did not testify during the two-month trial. He is expected to appeal against the verdict.
On November 8, Hwang’s lawyers said he should not be in prison.
Lawyers said prosecutors have not and cannot prove that Hwang’s alleged lies caused losses to the banks. They also said Hwang’s age, cardiovascular disease, philanthropic activities and low risk of recidivism supported putting him behind bars.
Hwang’s co-defendant, former Archegos CFO Patrick Halligan, was convicted in the same trial on three criminal charges. The verdict in his case will be announced on January 27, 2025.
