Archegos Capital Management, a private investment firm with $36 billion invested, collapsed in 2021. Hwang will be sentenced on Oct. 28, the judge said. He will be free on bail until then. He could theoretically face up to 200 years in prison.
The jury in a federal court in Manhattan confirmed 10 of the 11 charges against the financier, according to various American media. Former Archegos CFO Patrick Halligan was found guilty on all three charges.
Both men were convicted of defrauding Archegos counterparties such as Credit Suisse Group AG and UBS Group AG by lying to them about the firm’s trading activities and the level of risk in its portfolio. Hwang was separately found guilty of manipulating several stocks, including the former ViacomCBS, though he was acquitted in relation to one stock. Both men were also convicted of participating in an extortion conspiracy.
Drive up stock prices
In the midst of the Covid-19 pandemic, Sunn Kook Hwang (real name “Bill Hwang”) had built up huge positions in a number of companies in just a few months.
At its peak in March 2021, Archegos had exposure to as much as $160 billion through derivatives, multiplying the clout of Bill Hwang’s firm, but also the risks that came with it.
His goal was to drive up the stock prices of the few companies Archegos had invested in. For example, the valuation of ViacomCBS (now Paramount Global) quadrupled in just over four months.
At the same time, the South Korean-born American financier and three of his executives hid the size of their positions from the institutions that sold them the swaps.
Credit Suisse getroffen
The fragile edifice collapsed when ViacomCBS announced a capital raising in March 2021, triggering a sell-off on Wall Street.
This caused a domino effect, which accelerated the melting away of Archegos’ cash position and caused the price of shares held by the investment fund to plummet.
About $100 billion in market capitalization was wiped out, hurting the other shareholders of these companies and the institutions that had done business with Archegos, mainly banks that had extended credit.
The worst hit was Credit Suisse, which lost about $5.5 billion. All in all, the banks involved lost about $10 billion.
Credit Suisse weakened further, nearly going bankrupt in March 2023 before being acquired by Swiss rival UBS.
To give evidence
During the trial, the prosecution relied on two former Archegos executives who testified at the hearing. One of them alleged that Bill Hwang had directed him to misrepresent the situation at Archegos.
Lawyers for the main suspect tried unsuccessfully to discredit this evidence, insisting that the financier had never sold his shares to profit from his activities.