Key Takeaways
- • Sung Kook "Bill" Hwang was sentenced to 18 years in prison by US District Judge Alvin Hellerstein in Manhattan for his role in the collapse of Archegos Capital Management, after a jury convicted him on 10 criminal charges in July, including wire fraud, securities fraud and market manipulation.
- • Archegos managed $36 billion but, using borrowed money through total return swaps, carried roughly $160 billion in stock market exposure, more than four times its managed assets.
- • The firm's failure left major banks with more than $10 billion in losses, with Credit Suisse alone losing $5.5 billion, and forced sales of the underlying shares wiped out more than $100 billion in market value.
- • Prosecutors had sought 21 years and $12.35 billion in forfeiture and restitution; the judge was expected to rule on the financial penalties on Thursday, while Hwang's lawyers say his net worth is "at most" $55.3 million.
- • Former Archegos CFO Patrick Halligan was also convicted at trial and will be sentenced on January 27.
Summary
Sung Kook "Bill" Hwang was sentenced to 18 years in prison on Wednesday in Manhattan for his role in the collapse of Archegos Capital Management, according to the report. US District Judge Alvin Hellerstein imposed the sentence after a jury found Hwang guilty in July on 10 criminal counts, including wire fraud, securities fraud and market manipulation. Prosecutors had requested 21 years, an unusually long term for a white-collar crime, and sought $12.35 billion in forfeiture and restitution. The judge was expected to decide on those financial terms on Thursday.
Hwang began his career under hedge-fund manager Julian Robertson and later ran Tiger Asia Management, which pleaded guilty to wire fraud in an insider trading case in 2012. He established Archegos as a family office the following year. Archegos managed $36 billion, but Hwang used borrowed money that exposed the firm to approximately $160 billion in stock market risk. The positions were held through total return swaps, under which the bank holds the shares and the client receives the gains or bears the losses without owning the stock directly.
When Hwang's favoured stocks declined, the banks issued margin calls, which he could not meet. The banks then sold the shares behind his swaps, all at once, pushing prices lower and erasing more than $100 billion in market value. The banks' own losses exceeded $10 billion. Credit Suisse alone lost $5.5 billion, and Nomura Holdings also took heavy losses. Credit Suisse is now part of UBS. Judge Hellerstein said the losses caused by Hwang's conduct were larger than any he had handled, and prosecutor Andrew Thomas described the collapse as "a national calamity."
In passing sentence, the judge compared the case with that of Sam Bankman-Fried, founder of FTX, who was sentenced to 25 years in March for stealing $8 billion from FTX users. Hwang's lawyer, Dani James, argued the cases differed, stating that Bankman-Fried "was literally stealing from his customers." Hwang's lawyers had requested no prison time, no forfeiture and no restitution, and asked that he be freed on bail pending appeal, citing his charity work through the Grace and Mercy Foundation. In his own statement to the court, Hwang expressed remorse and said he wanted to make amends. His lawyers say his net worth is now "at most" $55.3 million, far below the $12.35 billion prosecutors seek. Patrick Halligan, Archegos' former chief financial officer, was also convicted at trial and will be sentenced on January 27.
Hwang began his career under hedge-fund manager Julian Robertson and later ran Tiger Asia Management, which pleaded guilty to wire fraud in an insider trading case in 2012. He established Archegos as a family office the following year. Archegos managed $36 billion, but Hwang used borrowed money that exposed the firm to approximately $160 billion in stock market risk. The positions were held through total return swaps, under which the bank holds the shares and the client receives the gains or bears the losses without owning the stock directly.
When Hwang's favoured stocks declined, the banks issued margin calls, which he could not meet. The banks then sold the shares behind his swaps, all at once, pushing prices lower and erasing more than $100 billion in market value. The banks' own losses exceeded $10 billion. Credit Suisse alone lost $5.5 billion, and Nomura Holdings also took heavy losses. Credit Suisse is now part of UBS. Judge Hellerstein said the losses caused by Hwang's conduct were larger than any he had handled, and prosecutor Andrew Thomas described the collapse as "a national calamity."
In passing sentence, the judge compared the case with that of Sam Bankman-Fried, founder of FTX, who was sentenced to 25 years in March for stealing $8 billion from FTX users. Hwang's lawyer, Dani James, argued the cases differed, stating that Bankman-Fried "was literally stealing from his customers." Hwang's lawyers had requested no prison time, no forfeiture and no restitution, and asked that he be freed on bail pending appeal, citing his charity work through the Grace and Mercy Foundation. In his own statement to the court, Hwang expressed remorse and said he wanted to make amends. His lawyers say his net worth is now "at most" $55.3 million, far below the $12.35 billion prosecutors seek. Patrick Halligan, Archegos' former chief financial officer, was also convicted at trial and will be sentenced on January 27.
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