Archegos Capital Founder Bill Hwang Sentenced To 18 Years In Prison

Archegos Capital founder Bill Hwang was sentenced to 18 years in prison for fraud and market manipulation linked to the 2021 collapse of his $36 billion family office today.

The sentence, handed down by US District Judge Alvin Hellerstein in New York, was less than the 21 years prosecutors requested. Hwang’s lawyers had argued for no prison time, according to Bloomberg.

The judge said during sentencing: “The amount of losses that were caused by your conduct are larger than any amount of losses I’ve deal with as a judge.”

Bloomberg wrote that during Wednesday’s hearing, Judge Alvin Hellerstein signaled he would impose a harsh sentence on Bill Hwang, dismissing his request for no jail time as “utterly ridiculous”.

Comparing Hwang to FTX founder Sam Bankman-Fried, who received 25 years for fraud, Hellerstein questioned: “What was worse? Mr. Bankman-Fried’s fraud or Mr. Hwang’s fraud?”

Hwang’s lawyer, Dani James, adjusted her request to a four-to-five-year sentence, citing his charitable work and modest lifestyle, though the judge was skeptical, noting his luxury apartment in Hudson Yards. Hwang briefly expressed regret, thanking supporters and asking for a sentence that would allow him to continue serving society.

Prosecutor Andrew Thomas called for a tougher sentence, highlighting Hwang’s prior insider trading conviction with Tiger Asia in 2012. The judge acknowledged Hwang’s history and dismissed claims that his actions at Archegos didn’t directly cause banks’ losses.

Bloomberg noted that Archegos’ case stood out as the victims were mainly Wall Street banks. Hwang’s lawyers argued the banks knowingly took risks for lucrative fees, but Judge Hellerstein barred a “blame the victim” defense, a key issue in Hwang’s planned appeal.

The jury found Hwang misled banks about Archegos’ holdings, claiming large stakes in tech giants like Apple and Microsoft, while actually concentrating in a few illiquid stocks like ViacomCBS.

As Reuters noted earlier this year, Archegos faced crippling margin calls in March 2021 due to falling stock prices. This, in turn, led to significant losses for Archegos and its lenders, including Credit Suisse and Nomura Holdings.

Hwang and CFO Patrick Halligan, charged with racketeering conspiracy and multiple counts of fraud and market manipulation, had pleaded not guilty.

At trial, they contested the prosecutors’ claims of market manipulation, which some legal experts viewed as a challenging case for the government.

Hwang was arrested in April 2022 and charged with racketeering conspiracy, securities fraud and wire fraud in connection with a scheme to manipulate the share prices of public companies in order to boost profits. He was then released on $100 million bail. 

According to the 40-page indictment, Hwang engaged in a “fraudulent scheme” that included “interlocking deceptive acts and misconduct, through false and misleading statements to security-based swap (“SBS”) counterparties and prime brokers and manipulative trading designed to artificially move the market, which, in tandem, increased Archegos’s assets under management from around $4 billion to over $36 billion in just under six months.”