Archegos’s Bill Hwang sentenced to 18 years in prison for massive US fraud

Hwang had been convicted in July on 10 criminal charges including wire and securities fraud, market manipulation.

Former billionaire investor Sung Kook “Bill” Hwang has been sentenced to 18 years in prison over the collapse of Archegos Capital Management, which cost Wall Street banks more than $10bn.

Hwang was sentenced on Wednesday by United States District Judge Alvin Hellerstein in Manhattan, where a jury convicted Hwang in July on 10 criminal charges including wire fraud, securities fraud and market manipulation.

“The amount of losses that were caused by your conduct are larger than any other losses I have dealt with,” Hellerstein said before announcing the sentence.

Archegos’s March 2021 implosion took less than a week, stunning Wall Street and Hwang’s lenders.

The US Attorney’s office in Manhattan sought a 21-year prison term for Hwang – unusually long for a white-collar case – and for him to forfeit $12.35bn and make restitution to victims.

“It stands among a rare class of cases that truly could be described as a national calamity,” prosecutor Andrew Thomas said at the sentencing hearing before Hellerstein.

Hellerstein did not reach a decision on Wednesday on whether Hwang must forfeit money or pay restitution. The sentencing hearing is expected to resume on Thursday.

Before sentencing Hwang, Hellerstein asked the defendant’s lawyer, Dani James, how she thought Hwang compared to Sam Bankman-Fried, who was sentenced in March to 25 years in prison for stealing $8bn from users of the now-bankrupt FTX exchange.

“Mr Bankman-Fried was literally stealing from his customers,” James said. “I don’t think that’s what’s happened here.”

Hwang had asked for no prison, forfeiture or restitution, and to remain free on bail while he appealed his conviction. James said his low risk of committing more crimes meant a lengthy prison term served no purpose.

“The notion that he would commit a crime in the future, it’s just not so,” James said.

Bankman-Fried denies wrongdoing and is appealing his conviction.

Aggressive borrowing

Hwang, 60, was a protege of late hedge-fund billionaire Julian Robertson.

He set up Archegos in New York as a family office in 2013, the year after his former hedge fund Tiger Asia Management pleaded guilty to wire fraud in an insider trading case.

Prosecutors accused Hwang of lying to banks about Archegos’s portfolio so he could borrow money aggressively and make concentrated bets on media and technology stocks such as ViacomCBS, now called Paramount Global.

While Archegos eventually managed $36bn, Hwang’s borrowing helped him amass $160bn of exposure to stocks.

His downfall occurred when Hwang was unable to meet margin calls, as the prices of some of his favourite stocks began falling and various banks unloaded stocks that had backed his so-called total return swaps.

More than $100bn of market value in Hwang’s stocks was wiped out. Several banks suffered losses, including Credit Suisse, which lost $5.5bn, and Nomura Holdings. Credit Suisse is now part of UBS.

Hwang’s lawyers’ request for no punishment also cited Hwang’s Christian faith and his nonprofit Grace and Mercy Foundation, which has, since 2006, donated at least $600m to combat homelessness, poverty and human trafficking, among other causes.

In a statement to the court before Hellerstein announced the sentence, Hwang said he hoped the punishment would “allow me to serve as much as I can given the circumstances”.

Hwang’s lawyers have said his net worth has fallen to “at most” $55.3m.

Hwang’s co-defendant, former Archegos Chief Financial Officer Patrick Halligan, was convicted at the same trial on three criminal charges. His sentencing is scheduled for January 27. Both chose not to testify at their two-month trial.