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Former Wall Street trader Bill Hwang has been sentenced to 18 years in prison, capping an extraordinary fall from grace for the Archegos founder who was earlier this year found guilty of orchestrating a massive market deception that cost big banks billions of dollars.
Judge Alvin Hellerstein on Wednesday said the actions of the 60-year-old, who was convicted of fraud and market manipulation in July, warranted “serious punishment”, and compared the scale of his crimes to those of FTX’s Sam Bankman-Fried, who was recently given 25 years in prison.
During the eight-week trial this summer, Hwang was shown to have used secretive trading strategies to quietly drive up the share price of media and technology groups including Discovery, Viacom and Tencent, before a series of adverse events led to a sudden sell-off in March 2021.
The ensuing fire-sale rocked global equity markets and left Archegos’s lenders — including Credit Suisse, Nomura, Morgan Stanley and UBS — with combined losses of more than $10bn. It also prompted a revamp of due diligence processes at some of Wall Street’s biggest banks.
In brief remarks ahead of his sentencing, Hwang, a devout Christian born in South Korea who was once one of the wealthiest evangelicals in America, said he was “grateful to God” for his blessings, and felt the pain of those who suffered as a result of Archegos’ collapse.
Relatively unknown outside financial circles, Hwang — who came to the US aged 19 barely able to speak English and went on to study economics — worked at New York-based Tiger Management from 1996 to 2001, where he was a protégé of hedge fund pioneer Julian Robertson.
He subsequently founded and ran Tiger Asia, a fund focused on Asian equities, which was hastily closed in 2012 after it was accused of insider trading and pleaded guilty to US fraud charges.
Soon after, Hwang launched Archegos, investing a few hundred million dollars of his own money. He amassed powerful positions in a handful of stocks using derivatives known as swaps — a method which at the time allowed the purchaser to conceal their identity from the market — and controlled more than $30bn of assets before the fund’s implosion.
US prosecutors had asked Hellerstein to sentence Hwang to 21 years behind bars, and order him to forfeit his assets, arguing in court on Wednesday that his fraud was “pervasive and persistent”.
In advance of the hearing, they wrote that Hwang showed “no sympathy for individuals who purchased stock at inflated prices and lost money when the value collapsed, for the employees of banks across Wall Street . . . or for his own employees”.
In the weeks leading up to Hwang’s sentencing, his lawyers had asked for him to be spared prison time, citing his charitable work and claiming that the prosecution had not adequately proven that the prices of the relevant shares fell solely due to Archegos’s trading.
“The prosecution simply cannot meet its legal burden to exclude all losses attributable to causes other than the purported market manipulation,” Hwang’s lawyers wrote.
“Bill’s money is gone . . . he lost it all,” Dani James, a lawyer for Hwang, argued in court on Wednesday. Hellerstein countered that he still owned a home in New Jersey and rented an apartment in Manhattan’s Hudson Yards.
Former Archegos chief financial officer Patrick Halligan, who was tried alongside Hwang, and found guilty on three counts, will be sentenced at a later date.
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