The founder of Archegos Capital Management, the hedge fund that collapsed in 2021, was found guilty Wednesday of securities and market manipulation fraud in a scheme that prosecutors said cost global investment banks billions of dollars.
Bill Hwang stared straight ahead as the verdict was read, taking a few sips of water as the jury found him guilty of 10 criminal counts. He was acquitted of one count of market manipulation but found guilty of six other counts.
Federal prosecutors in New York said Hwang and his co-conspirators artificially inflated the value of nearly a dozen stocks before the investments failed, wiping $100 billion off the market value of the companies he founded.
Huang’s lawyer argued that his client was an honest investor who put money into stocks he believed in.
Prosecutors said Hwang lied to banks to obtain billions of dollars to grow his New York-based investment firm. Its investment portfolio has grown from $10 billion to $160 billion.
Assistant U.S. Attorney Alexandra Rothman told jurors at the start of the case that Hwang, a billionaire, “wanted to be a legend on Wall Street” and was involved in a scheme involving stock derivatives A plan for trading to secretly build unusually large positions in just a few years.
Huang’s lawyer, Barry Burke, said in opening arguments that his client “did not live the life of a billionaire” and had not made any false statements to any bank about his business.
In closing arguments earlier this week, Burke told the jury his client was innocent, saying: “Huang made big bets on stocks that he believed in.
The indictment alleges that the investing public was unaware that Archegos had directed transactions and stakes in multiple companies because the securities it used did not have public disclosure requirements. Prosecutors said Hwang and his company once secretly controlled more than 50% of ViacomCBS.
However, this high-risk operation leaves the company’s portfolio vulnerable to price fluctuations in a small number of stocks.
The indictment alleges that a margin call in late March 2021 wiped out more than $100 billion in market value in just a few days.
The indictment alleges that nearly a dozen companies defrauded by Archegos, as well as banks and prime brokers, lost billions of dollars as a result.
The jury also convicted the company’s former financial officer, Patrick Harrigan.
