Hwang was charged with extortion and other charges.
Federal prosecutors in New York on Wednesday announced criminal charges against the founder of a private investment firm and his chief financial officer for alleged “manipulative trading” and “deceptive conduct” that led to a multimillion-dollar fraud.
Bill Hwang, the founder of Archegos Capital Management, and Patrick Halligan, the chief financial officer, were charged with conspiracy, securities fraud and wire fraud.
“We allege that these defendants and their accomplices lied to banks to obtain billions of dollars which they then used to inflate the stock price of various publicly traded companies,” said Manhattan US Attorney Damian Williams. “Lies fueled inflation, and inflation led to more lies. It went round and round.”
According to the indictment, Hwang and Halligan “corrupted the operations and activities of the family office known as Archegos” and used it “as an instrument of market manipulation and fraud.” The Family Offices serve individuals and families with high purchasing power.
Lawrence Lustberg, an attorney representing Hwang, said he was “extremely disappointed” with the charges.
“We are extremely disappointed that the US Attorney’s Office has seen fit to prosecute a case that has absolutely no factual or legal basis; such a prosecution, for open market transactions, is unprecedented and threatens all investors,” Lustberg said in a statement. statement. “As you will see when the facts unfold, Bill Hwang is completely innocent of any crime; there is no evidence whatsoever that he has committed any kind of crime, much less the exaggerated accusations that permeate this indictment.”
Halligan’s attorney, Mary Mulligan, said in a statement that her client is “innocent and will be exonerated.”
The consequences were far-reaching, prosecutors said. Stock prices of various companies were manipulated, employees’ savings were gambled away and billions of dollars in losses were left to different banks. UBS alone lost $861 million, according to the indictment.
The criminal charges followed the spectacular implosion, in March 2021, of Archegos, which lost billions in just a few days. Prosecutors said Hwang traded in a way that hid the true size of his positions from the rest of the investing public.
In one example described in court documents, Archego controlled more than half of Viacom’s free trade stock and no one outside of Archego knew about it, including Viacom executives. Supposedly, this was done by using various banks and brokerage houses to ensure that no entity knew about the scope of the operations.
The alleged criminal conduct increased Archegos’ portfolio, Hwang’s personal fortune, from $1.5 billion to $35 billion in one year, according to prosecutors.
Bail was set at $100 million for Hwang during a court appearance on Wednesday. He also had to attest that he lost his passport and his wife had to surrender hers. Bond set his sights on $1 million for Halligan.
Both are expected to be released today and their travel will be restricted.