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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 found guilty earlier this year of orchestrating a massive market deception that cost major banks billions of dollars .
Judge Alvin Hellerstein said on Wednesday that the actions of the 60-year-old, who was convicted in July of fraud and market manipulation, warranted a “severe sentence”, and compared the scale of his crimes to those of FTX’s Sam Bankman-Fried, who was recently sentenced to 25 years in prison.
During the eight-week trial this summer, Hwang was found to have used secret trading strategies to quietly boost 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 resulting sale roiled global stock markets and left Archegos’ lenders – including Credit Suisse, Nomura, Morgan Stanley and UBS – with a combined loss of more than $10 billion. It also led to an overhaul of due diligence processes at some of Wall Street’s largest banks.
In brief remarks before his sentencing, Hwang, a devout Christian born in South Korea and once one of the wealthiest evangelicals in America, said he was “thankful to God” for his blessings, and felt the pain of those who suffered as a result of the collapse of Archegos.
Relatively unknown outside financial circles, Hwang moved to the US at age 19, barely speaking English, and went on to study economics. He worked at New York-based Tiger Management from 1996 to 2001, where he was a protégé of hedge fund pioneer Julian. Robertson.
He then founded and ran Tiger Asia, a fund focused on Asian stocks, which was hastily closed in 2012 after being accused of insider trading and pleading guilty to U.S. 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 that allowed the buyer at the time to hide his identity from the market — and managed more than $30 billion in assets before the fund’s implosion.
U.S. prosecutors had asked Hellerstein to sentence Hwang to 21 years in prison and order him to forfeit his assets. On Wednesday, they argued in court that his fraud was “pervasive and persistent.”
Before the hearing, they wrote that Hwang “showed no sympathy for individuals who bought stocks at high prices and lost money when the value collapsed, for the employees of banks across Wall Street. . . or for its own employees”.
In the weeks leading up to Hwang’s conviction, his lawyers had asked that he be spared prison time, citing his charity work and claiming that the prosecution had not sufficiently proven that the prices of the relevant shares were solely due to Archegos’ trading decreased.
“The plaintiff simply cannot meet its statutory burden of excluding all losses attributable to causes other than the alleged market manipulation,” Hwang’s lawyers wrote.
“Bill’s money is gone. . . he lost everything,” Dani James, a lawyer for Hwang, argued in court on Wednesday. Hellerstein countered that he still owned a house 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.