Archegos Capital Management founder Bill Hwang and CFO Patrick Halligan are charged with racketeering and conspiracy as feds claim they ‘inflated company’s portfolio to $35 billion’
- Bill Hwang and Patrick Halligan were indicted for securities fraud and wire fraud
- They were charged with racketeering and conspiracy, unsealed documents say
- They ‘engaged in schemes to manipulate the prices of publicly traded securities’
Archegos Capital Management founder Bill Hwang and his CFO Patrick Halligan have been hit with fraud charges a year after the family office imploded spectacularly.
In a federal indictment unsealed on Wednesday, Hwang and Halligan were charged with 11 criminal counts, including racketeering conspiracy, market manipulation, wire fraud and securities fraud.
Prosecutors say that Hwang used Archegos as an ‘instrument of market manipulation and fraud,’ causing billions in losses for banks, other investors in financial markets, and their own employees.
The schemes pumped up the value of Archegos’ portfolio from $1.5 billion to $35 billion in just a year, according to the indictment.
Bill Hwang (pictured) and Patrick Halligan were also indicted for securities fraud and wire fraud, Manhattan prosecutors said
Prosecutors said that Hwang and Halligan ‘corrupted the operations and activities’ and activities of the family office to manipulate the price of stocks it held and lie to banks and brokerages.
Archegos, a family office run by former Tiger Asia manager Hwang, defaulted on margin calls in March of last year, leaving banks nursing heavy losses and sparking a fire sale of shares including ViacomCBS and Discovery Inc.
The blowup cost big global banks including Credit Suisse , Nomura Holdings, Morgan Stanley and Deutsche Bank more than $10 billion in losses.
Attorney information for the two men was not immediately available.
Hwang’s fund ran into trouble following a March 24, 2021 stock sale by media company ViacomCBS Inc.
Archegos was heavily exposed to ViacomCBS, sources said, and the slide in the company’s shares set off alarm bells at its banks, which called on the fund for more collateral.
Credit Suisse lost more than $5 billion when Archegos defaulted on a margin call last year
When the firm could not meet the demand, the banks started selling the collateral, which included shares of Baidu Inc and Tencent Music Entertainment Group, among others.
Hwang started out as a stock salesman for Hyundai Securities in the 1990s then went to work for legendary investor Julian Robertson at Tiger Management -becoming one of his so-called Tiger Cubs.
Hwang went on to found Tiger Asia Management with $25 million of Robertson’s money, growing the fund to $5billion. But then it came crashing down when he was accused of insider trading in 2012.
Wall Street wouldn’t work with him for many years after he agreed to pay $44million in penalties and he shuttered his company.
Then he founded his private investment firm, Archegos Capital Management, and his genius at picking stocks started to persuade the banks that he could no longer be ignored and they started doing business with him again.
The last to capitulate was Goldman Sachs, which only agreed to work with him again in 2020 after bankers lobbied the company’s risk department.
They noted that under Hwang’s stewardship, Archegos had grown from assets of $200 million when he founded it in 2012 to more than $10 billion — an increase of 4,900 percent — and, they claimed, the reward was worth the danger.
Developing story, more to follow.
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